ADVANCE warns recruiters: Dont be HMRCs low-hanging fruit
The company says following the steps will minimise the risk of an agency being seen as low-hanging fruit by HMRC once legislative changes take effect.
1. Beware of & lsquo;snake oil’ solutions
Some opportunistic umbrella companies and contractor accountants are approaching recruitment firms, claiming to have a magic formula for dealing with the government’s April 2016 reforms. There is no such thing as a one-size-fits-all solution. Unfortunately, we’re likely to see a flood of dubious schemes emerging in the next few months. Our advice to recruiters would be to bear in mind that if something sounds too good to be true, then it probably is.
2. Get to grips with SDC
Supervision, direction or control (SDC) will, thanks to 2014’s onshore employment intermediaries legislation, be a familiar concept to recruiters placing self-employed freelancers. SDC will soon be vital for umbrella and limited company contractors too. This looks like being the key test not only for T&S expenses but also IR35. It’s therefore vital that professional staffing firms get up to speed with SDC and adopt an effective approach to it.
3. Keep evidence
Implementing a robust approach to SDC management is only half the battle. It’s just as important that you document your processes and results in order to demonstrate how you reached a decision on whether a contractor or group of contractors is subject to SDC. This will hold you in good stead should HMRC fix its gaze in your direction. Think of it like showing your working on a piece of maths homework.
4. Speak to your clients
It’s important that you maintain an open dialogue with your clients regarding the legislative landscape. By working in partnership you will be able to introduce commercially viable solutions that protect every element of the supply chain, from contractor to end client.
5. Choose your service providers carefully
More than ever, it’s vital that recruitment firms conduct due diligence when selecting which umbrella companies and contractor accountants to work with. Compliance is key, so be sure to check a prospective partner’s accreditations and affiliations when reviewing your preferred supplier list (PSL). The Recruitment and Employment Confederation (REC) is advising its members to work only with service providers, such as ADVANCE, that are full members of the Freelancer & Contractor Services Association (FCSA).
Regarding the detail of forthcoming legislative changes, ADVANCE says the picture should become clearer later this week with the publication of draft legislation on travel and subsistence (T&S) and a consultation document setting out the government’s intentions regarding IR35.