IR35: Time to take the bull by the horns
Ann Swain, CEO of APSCo
The draft legislation on off-payroll working in the public sector has finally landed. While the document is largely in line with our expectations, I make no secret of the fact that we at APSCo are extremely disappointed that fee-payers will shoulder the liability of incorrect status determinations – particularly as this is at odds with what was anticipated. It is frustrating that recruiters will, in most cases, continue to bear the brunt of liability in the supply chain whether as the fee payer or the first tier supplier – but the show must go on.
While we admire the pluck of groups such as the ‘Stop the Off-Payroll Tax Campaign’ which protested outside parliament following the publication of the legislation, realistically, there is slim to zero chance that the changes won’t be implemented as outlined in the draft legislations. The reality is that it’s time to roll our sleeves up and take the bull by the horns.
Preparation is key
If we have learned anything from the changes to off-payroll working in the public sector, which came into effect in 2017, it is that preparation will be key to navigating the new legislative landscape with ease. However, while the vast majority of recruitment leaders we work with have a firm grasp of how the changes will impact the way they work, and what they must do to prepare, it seems that this isn’t necessarily the case among end user clients.
In its own response to the consultation, EY reported that it believes 95 per cent of businesses expect to be impacted significantly by the off-payroll rules, with more than half expecting changes to be disruptive. A survey among our own members, however, paints a very different picture.
Fewer than half (39 per cent) of the professional recruitment firms polled by APSCo believe that most of the businesses they work with are aware of the incoming changes. In addition, just 12 per cent said the majority of their clients are actively preparing for the updated legislation.
When asked if the organisations they recruit into are expecting to pay more for contractors after the changes are implemented, just 10 per cent said ‘yes’, 21 per cent said ‘no’ with the remaining 69 per cent ‘not sure’. This suggests that many are unaware of the wider potential consequences of the reform.
Previous research from APSCo following changes to off-payroll working in the public sector found that 45 per cent of professional recruitment companies witnessed the costs of resourcing contractors increasing after the new rules were introduced. Of these, 46 per cent reported that rate rises were in excess of 15 per cent.
This time around, despite the need for greater clarity around some areas of the legislation (not to mention ongoing concerns over HMRC’s ability to police the legislation it is seeking to reform), the professional recruitment sector has firmly set the wheels in motion to ensure it is equipped to respond to the changes. Indeed, our members are already working hard to review supply chains, business models, budgets, systems and processes to ensure they are ready to hit the ground running in April.
However, we must not forget that the professional recruitment community also has a responsibility to advise and guide the employers they work with to ensure that they not only remain complaint, but also retain access to the skills they need to thrive. Do your clients know what ‘sized’ company they are classed as? Which tools will they use to confirm status determination? And how can they ensure that ‘reasonable care’ is used when reaching a decision?
Ultimately, while change may be arduous and inconvenient, thankfully, the professional recruitment sector is nothing if not adaptable - and APSCo is, of course, here to help our members to contend with any challenges that come our way.