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IR35 advice for recruitment agencies

Julian Ball

Julian Ball | Legal Director

Thursday 4th Feb, 2021

The countdown to April 6th is on. The Government have already confirmed that the introduction of the off-payroll working legislation will not be delayed in 2021 so it’s imperative that recruitment agencies have a plan in place.

As always, agencies can continue to contact their PayStream Client Relationship Manager for hands-on IR35 advice, however, here are a few quick pointers of things we learnt from our clients in the run up to the changes last April:

  • Are your clients aware that you need to receive a Status Determination Statement (SDS) from them in plenty of time in order to deliver the result (and the options available) to your contractors? If not, we recommend you start these conversations right away. An inside IR35 determination means you’ll need to explain what options are available to your contractors, whether it be PAYE, umbrella or deemed payment. Bear in mind that once the worker has made up their mind, you’ll need to allow additional time to put new contracts into place.
  • It’s important that you have a solution ready for contractors deemed to be inside IR35. You’ll need to agree a process with an accredited umbrella company, ensuring that your contractors have signed all necessary paperwork so that they are ready to be paid by the umbrella company for any work carried out post April 5th. We recommend you agree on a reporting process with your chosen umbrella company. In doing so, you’ll know in advance which contractors have already signed up and which ones you’ll need to chase. Due to the large volumes of switchers, it’s also imperative that the umbrella company has the capacity to sign up the workers quickly.
  • In 2019, one of the main problems agencies encountered was delays caused by getting clients to make informed decisions on the SDS. Early preparation is key. Agencies often have additional knowledge that could be of real benefit to the client, especially when determining an outside IR35 decision. Use this knowledge to your advantage, it could really help speed up the process.
  • It’s no secret that contractors discuss their contracts with one another, therefore have a plan in place to ensure SDSs for groups of workers doing the same job are consistent and issued at the same time, otherwise you may encounter problems if there are several different determinations. If workers are involved with the contract review process, they will learn from other SDSs and potentially tailor their answers in order to get the outcome they want.

For more information regarding the off-payroll working legislation, get in touch with your CRM here.

Related page - IR35 Comply: our contract review service

Voted the UK's Best Contractor Innovation, IR35 Comply allows contractors to complete and submit their IR35 questionnaires online. Agencies can also carry out generic role reviews to understand whether they are best advertising the roles as inside or outside IR35.

So, if you’re an agency working in the public sector or preparing for the private sector changes in 2021, we are perfectly positioned to supply you with practical, clear and tailored advice on IR35.

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