The IR35 legislation was updated and made mandatory for the public sector in April 2017. In the Autumn 2018 budget, the government reiterated that the IR35 would cover the private sector from April 2020. The public sector faced many challenges while implementing IR35, so it is a great opportunity for procurement and other private sector companies to learn from this.
The IR35 legislation places the onus on the hiring organisation to determine whether a consultant, procurement interim, or contractor falls inside or outside the legislation. The hiring company must also assume liability for associated taxes, should the worker be deemed inside IR35. It can have an immense effect on procurement that often uses consultants and contractors (such as sole-traders). Here are some steps that procurement can take to ensure preparation for IR35 when it comes into force in April 2020.
Prepare from today
Procurement must begin preparing for the new legislation now. The good news is that you will not have to change the way you use interim procurement workers. Instead, you will ensure access to the talent and skills you need temporarily without any hassle.
Assess your risk
Determine how IR35 will affect procurement. Once you analyse the risks, you can develop possible solutions. This way, you will be prepared for different scenarios and eventualities.
Have a long-term strategy in place
Procurement needs a long-term strategy to use contractors and interims once IR35 comes into force. It will allow you to work out how to onboard and use contractors and procurement interims for different projects and assignments, ensuring greater control and visibility.
IR35 requires an organisation to prove that the interim, contractor, or consultant does not have an employment relationship with the company. So, take a close look at the procurement contracts and agreements to ensure they stipulate that the concerned person is offering services. Under such circumstances, it will not be considered employment, and the professional or business will be outside IR35.