A forward thinking approach for use of flexible resource Meet the - - PowerPoint PPT Presentation

A forward thinking approach for use of flexible resource

Meet the team…

Vicky Roythorne Head of Compliance and Communication

T: +44 (0) 1793 430 021 E: vroythorne@outsource-uk.co.uk

• There are approximately 2 million

self-employed professionals working in the UK.

• Out of which, approximately 1.77 million

work as full-time contractors

• Number of self-employed professionals in the UK has

increased by 43% approximately.

• The overall contribution to the UK economy by freelancing

professionals is around £119 billion.

• 15% of the UK workforce is self-employed

(office of National statistics) Some of the key projects and

• pportunities for UK contractors and

freelancers:

• IT Contracting
• Oil & Gas
• Renewable Energy
• Construction
• Media and Design
• HS2
• Automotive
• Nuclear

Trend towards working in this way Flexibility! Talent shortages Niche skill sets Enable completion of projects

Why hire flexible resource?

Contractor PAYE Bench Consultant Umbrella Interim Fixed Term

Not a one size fits all solution!

Recruiters who responded to a recent REC survey (91%) said their clients have little or no awareness of the changes coming into effect which will impact on their ability to hire flexible resource.

9 out of 10

Current status: Off-payroll Rules

• Introduced in 2000
• Implemented to ensure that someone working like

an employee (but through a limited company) pays similar taxes to other employees.

• Currently, it is up to each contractor to decide if the

IR35 rules apply to each assignment their business undertakes

IR35 – contract hires

1.2 BILLION The Government

estimate of the cost of non-compliance

Autumn Budget – October 29th 2018

Reformed IR35 rules for the Private Sector from April 2020

What are some of the key elements which make an assignment ‘inside’ or ‘outside’ IR35?

Substitution

Can the contractor send a replacement if they can’t attend?

Mutuality of Obligation

Is either party obliged to give or receive work?

Control & Supervision

Is the contractor ‘managed’ or are they using their own skills and experience to deliver a set of objectives?

Equipment

Does the contractors’ business provide its own equipment?

Part & Parcel

How much is the contractor ‘part and parcel’ of the client’s business?

Working arrangements

Does the contractor have to work specific hours, or request ‘holiday’ dates? Is training provided?

Risk

Can the contractor demonstrate there is financial risk?

IR35 Inside Outside

CONTRACTS WORKING PRACTICES

IF ASSIGNMENT IS INSIDE OF IR35, AGENCY MUST COLLECT TAX & NIC AT SOURCE, AND PAY EMPLOYERS NI

What will IR35 reform mean for your flexible hires?

Customer Worker

CLIENT MUST MAKE ASSESSMENT OF IR35 STATUS (based on contract and working practices) IF INSIDE IR35, WORKER COULD BE PAYE/UMBRELLA OR DEEMED EMPLOYMENT MODEL

• Work required to understand the rules
• Risk & Financial penalties for getting it wrong
• Increased costs
• Legal challenges?
• Resource availability – risk of losing resource to

competitors, or not being able to attract quality flexible resource

Why is this important for you?

1 2 3 4

• f public sector bodies

found IR35 rules changes in 2017 hard to implement Of public sector clients have had to increase day rates to contractors ‘inside’ of IR35 Of clients have had difficulty filling roles within the Public Sector

51% 28% 32%

Where is the Risk?

Hirer Outsource Worker

Pre April 2020, all risk for IR35 assessment sits with the worker Post April 2020, the hirer will need to make an IR35 status assessment. If this is not done within 30 days of an agency requesting this information, the hirer will be liable for unpaid tax and NIC

• liabilities. Hirers should take “reasonable care” in

assessing roles for an outside of IR35 status Post April 2020, if the above has been completed, it is the fee-payer who is liable for unpaid tax and NIC liabilities if the status is incorrect.

• HR
• Procurement
• Legal
• Tax
• Project Manager

Who in your business is responsible for this project?

1 2 3 4

1 year to go… Countdown is on!

How to prepare?

PSC Contractors: Assessing your existing contingent workforce

• Build a map of your existing pools of

contingent resource

• Analysis of current resource against IR35 key

criteria

• Split contractor population into groups – made

up of different levels of IR35 risk

• Include contractors in this process, to ensure a

true 360 analysis of current status

Determining IR35 status

Engaging Limited Company Contractors post April 2020

• Build best practice frameworks for your flexible hires
• Educate your stakeholders;
• Differences between contract and permanent

resource

• Business to business contracts supply chains
• Measuring performance on a deliverables basis
• Practical do’s and don’ts
• Check points to ensure process is followed

PSC Contractors: Future hires – making IR35 assessments & resource planning

• Implement a process for future hires
• Implement control mechanisms to check that

“reasonable care” has been taken – make sure you fulfil your obligations

• Roles can then be recruited based on

applicable IR35 status (or alternative contractual models utilised)

Alternative Contract Models for future hires Statement of Work

SOW contracts offer an alternative way of structuring services which, if operated properly, will be outside the scope of IR35. They can be structured for groups of resource,

• r individual role

requirements

Hirer Outsource Worker

True Statement of Work contracts remove IR35 consideration and risk from the hirer, because Outsource become the client for any PSC resource utilised, and therefore assume all IR35 responsibility. If the SOW’s are correctly set up and managed, the PSC should be ‘outside’

• f IR35

There is a SOW between Outsource and the hirer which is based around deliverables, and risks for non delivery

Alternative solutions – ‘inside’ hires

Where you determine that roles should be assessed as being ‘inside’ the scope of IR35, there are a number of alternative solutions – in addition to Statement of Work Contracts - that are available to allow you to continue to engage the flexible resource that you need.

PAYE

Bench Consultants Umbrella

Contractor PAYE Bench Consultant Umbrella Interim Fixed Term

Workforce planning!

IR35 Preparation Audit Programme

• 5. Consider alternative

solutions when a requirement does fall inside the scope of IR35

• 4. Resource plan for future

hires

• 3. Consider how to correctly

engage workers who are genuinely operating outside of IR35

• 2. Assess risks within

your existing workforce

• 1. Understand the

rules around IR35

Take part in

• ur mini-audit!

Thank you!

For more information visit:

https://cipd.outsource-uk.co.uk/ir35 Or email me at vroythorne@outsource-uk.co.uk

• Manchester •