IR35: How to lead discussions with end clients

This is a guest blog contribution by REC business partner Liquid Friday.

On April 6 2021 the rules for IR35 in the private sector will change. The only way that it is going to have any semblance of a smooth landing, is by everyone sharing their knowledge. 

Contractors, agencies, end clients, and supply chain partners alike – at this point no-one should be treating IR35 as the elephant in the room. 

The best way for recruitment agencies to stay ahead is for all client-facing staff to know enough about what’s happening to confidently engage with clients and potential clients. Your competitors will be doing this so don’t get left behind.

Is your end client a “small organisation”?

First things first. The off payroll IR35 reforms are expected to impact most of the private sector contractor workforce, as the majority are engaged by large organisations such as banks and construction companies.

However, small organisations are not affected by the reform, so check that your client does not fall into that cohort.

How HMRC defines a “small organisation” for this purpose is similar to the Companies Act 2006 definition. 

A small company must not meet 2 of these criteria:

• Net turnover exceeding £10.2m
• Balance sheet totalling more than £5.1 million
• More than 50 employees

Engage – Understand – Influence

Those who are outside the small company definition, ie. medium and large organisations, will be affected by the reforms, so from 6th April, the onus will be on them to determine whether contracts are inside or outside of IR35.  

To understand clients’ concerns, challenges and plans, it is important to keep the lines of communication open. For example, find out:

• Have they identified which groups of workers will need an IR35 determination – can you help with that?
• Have they identified which workers are likely to be “inside IR35”? 
• Have they considered the impact on contractor pay rates?
• Have they looked at contracting solutions for those considered inside IR35, and the timing for moving workers across to these?
• Do they understand the risks and consequences of using non-compliant solutions?

Knowing the answers to these questions will stand you in good stead for the future. From 6th April and beyond, agencies and end clients will need to work together to ensure:

• Status Determination Statements are accurate and communicated properly
• Challenged status decisions are dealt with appropriately
• Contracts and working practices reflect the determined IR35 status
• Evidence of IR35 status is documented throughout the engagement.

Take the wheel on IR35!

By taking the wheel with your clients on IR35, you can positively influence how they react and inspire confidence that they are on this journey with the right recruitment partner.

Of course, we are here to help. We can participate in meetings or Zoom sessions with your clients or contractors, both to support you and to provide free specialist advice and insight.

Speak to your Liquid Friday Account Manager if you would like to arrange this.

This article was originally published by Liquid Friday. 

This is a guest blog contribution for the REC website. The views expressed by guest writers reflect the individual's personal opinions.