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2020 IR35 changes taking over HR teams’ time, research reveals

HR managers across the UK are embroiled in an administrative nightmare as the April 2020 changes to off-payroll regulations fast approach, according to research Procorre. As well as already drowning in paperwork, other major concerns include rising costs, access to skills and maintaining a competitive edge.

Procorre surveyed over 500 UK HR professionals on the impact of the April 2020 changes on their day-to-day activities and their organisation. The research is part of the company’s new ‘Next10’ initiative, which looks at the changing regulatory landscape, trends and future markets that will impact the contracting industry.

47% of those surveyed said since the changes to IR35 regulations in the private sector were announced they’ve been ‘drowning in paperwork’, while half (50%) said they’ve found it difficult to concentrate on other tasks, and that planning for the changes has ‘taken over their time’ (47%). 37% of those surveyed strongly agreed that their ability to be agile will be impacted by the legislative changes, with a further 31% also somewhat concerned. The vast majority (84%) are worried about the drain on resources the administration will have on their team.

The cost of this administrative burden is seeing 27% of those surveyed spending between £200,000 to £499,999 to prepare for the changes. In fact, over a third (36%) of medium-sized businesses with between 100 to 249 employees are spending this much on getting ready, increasing to almost half (48%) of those with between 250 to 499 employees investing this amount.

Not only is the hit being felt by HR professionals on time & cost of preparing, 52% think that contractors will definitely increase their rates after the changes and 68% are worried that highly skilled contractors will be driven abroad to the advantage of their competitors. Two thirds (67%) said that following the changes in April 2020 it will be harder to recruit the necessary skills for their organisation.

With so many key issues at play most HR professionals surveyed did say they are seeking advice on the changes. 60% are receiving guidance from specialist IR35 consultancies, 54% from accountants, 46% from lawyers – with 42% looking to their recruitment agencies to provide counsel.

While 59% had sought guidance from a variety of sources including these, a third (32%) are yet to act and are ‘intending to seek advice’ – potentially exposing themselves to risk with the deadlines fast approaching.

Anne O’Donnell, CEO of Procorre, commented, “It is undoubtedly a stressful time for HR professionals as the private sector off payroll regulations fast approach, however, preparation is key. If HR departments have taken reasonable steps and put processes in place to ensure they and their contractors are compliant and operating within the correct status they shouldn’t have anything to worry about.’

“There is no ‘silver bullet’. It’s a case of taking a pragmatic, sensible approach and being able to show you’ve taken due care in your assessment of contractors’ status. In fact, businesses that embrace the changes can use it as an opportunity to review and improve their processes. This in turn will make them more attractive to contractors who also want to ensure they are operating within the guidelines.”

With the current level of uncertainty surrounding the future of the economy and business sector, given Brexit and the current political status quo, it’s hard to predict what will happen to the April 2020 private sector off payroll (IR35) regulations. In fact, 38% of those surveyed thought the forthcoming changes to legislation could even be scrapped entirely. However, it’s best to be prepared and see it as an exercise to improve business processes.

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