Guidance For Management Practice

IR35 Education for Businesses and Contractors

For companies that engage a flexible workforce it is vitally important that line managers understand the difference between an inside and outside IR35 engagement, and how the working practices differ. To avoid potential issues arising in the future, companies should where possible be supporting their staff ensure they are engaging flexible workers correctly. Status determination tests, contracts and insurances are all key elements of the process, but need to be backed up in practice to prevent a slip.

Contractors should now also be taking the time to refresh their understanding of the off-payroll legislation so there can be a level of self-policing and being mindful that outside IR35 working practices are being adhered to. It is important that contractors maintain an IR35 compliance evidence file that includes status determination test results, robust contacts that stipulate clear deliverables and insurances.

How can business help those within the organisation adapt to the change?

Regular training, education, and ongoing compliance management to manage working practices are the best ways to ensure IR35 compliance.

What is "reasonable care" and how should it be considered?

Reasonable care is a term HMRC use to ascertain whether an organisation has taken reasonable steps to determine IR35 status of a contractor.

However, taking reasonable care does not mean that you are off the hook entirely. As described above, you need to ensure that working practices are maintained and IR35 status is reviewed on an ongoing basis to ensure that you do not fall foul of back dated NICs and PAYE for a contractor you deemed outside of IR35.

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