Changes to the IR35 legislation will soon come into play and businesses are paying attention to the market to see what other businesses are doing to prepare.
At MBO Partners, we work with some of the world’s most recognized brands and they are already preparing. While the legislation comes into effect April 2020, you will want to have a fully operational compliance program well-established by the end of 2019.
Minimization of associated risk
The recent developments in UK legislation (IR35 and the Criminal Finances Act 2017 etc.) transfer the risk of engaging independent contractors from the contractor up the supply chain to the end client and the business paying the contractor
The legislative changes are going to put a statutory obligation on any client using the services of a limited company contractor to carry out an employment status classification, regardless of the method by which that contractor was supplied to the business. This is a dramatic change for businesses and the associated risks across a client’s independent contractor population are keeping many stakeholders awake at night.
Staged roll-out policies and procedures
MBO Partners has been running IR35 compliance programs for its clients for over two years now, applying the principles to the engagement of its clients’ contractors, in preparation for this legislation. From our experience, the bigger your contingent labor usage, the longer and more difficult the transition will be.
Our typical implementation plan has been to start with a smaller contractor population within our clients to gain a better understanding of their demographic and to stress test the processes in a more controlled environment. We are currently actioning 12-month plans to roll these policies and procedures out across the rest of the business.
PREMIUM CONTENT: UK Internal Staff Survey 2019: Internal Findings
Recommended timeframe
For those of you just starting this journey, here is a brief overview of some suggested time frames we are using with clients who are at similar stages of the cycle.
- Quarter 1 2019
- Start now, building a team, planning, identifying and auditing your risk to get an idea of your current state.
- Develop procedures and policies to manage this risk and then implement these procedures for a smaller “controllable” contractor population within your business.
- Quarter 2 2019 –During this stage, you should be aiming to roll out the new policies across a wider population of incumbent contractors. How long this takes will depend on the size of your population and on the data you have.
- Quarter 4 2019 – The new policies should now start to feel like standard operating procedures to your business. This quarter should be focussed on ironing out any kinks in the process by reassessing any areas of risk identified in Quarter 1 or by identifying new risks that have arisen and applying any required corrective actions.
It’s time to act now
This isn’t legislation that can be put off until later in the year. Stakeholders need to act now to ensure that not only does their business minimize the associated risk, but also that they give it time to strategically decide on how best to deal with their contractor populations and avoid losing talent to competitors who have a more structured approach.
