Off-payroll in the public sector came into effect a few years ago now, and the impact on the temporary workforce has been massive. Hats off to all the public sector organisations that took the legislation seriously and had reliable and efficient IR35 assessment protocols in place. Unfortunately, loads of companies failed to address the seriousness of IR35. These companies didn’t quite understand the impact that an “inside” assessment would have on temporary employees who were working “outside IR35” at the time.
We’re not here to name names, but we read that several public sector companies decided that blanket assessments were the answer and all of a sudden they let their temporary workforce know they were inside IR35 from that moment forward. Why did they do this? Well, it’s pretty obvious – to ensure they face zero liability in case they went ahead and made “real” assessments that were to be later investigated by HMRC.
It would be magnificent if the private sector learnt from the public sector in the build-up to April 2021 (off-payroll in the private sector). Hard-working and honest contractors were left with significantly less pay overnight as their assignments were suddenly deemed inside IR35. In a lot of cases – the IR35 assessment that was carried out on their assignment was either rushed, or entirely inaccurate. Again, not all public sector companies were unprepared, and we’d like to thank those who were ready.
If contractors are deemed inside IR35 after April 2021, and they’re assessed fairly – there isn’t much that can be done. With more and more agencies looking to outsource their payroll to umbrella companies, and end-clients wanting nothing to do with the payroll of their temporary staff – umbrella companies are a perfect solution. However, we’re not here to put wool over your eyes.
Using an umbrella will almost certainly see limited company contractors take home pay retention fall quite considerably. With employment costs coming into the equation (Employer’s National Insurance Contributions and the Apprenticeship Levy), we would like to encourage contractors and freelancers to ask for an uplift in their assignment rate. We’ve already seen a load of agencies offer increased rates for roles inside IR35, and this is really encouraging.
Ultimately – providing IR35 assessments are carried out fairly, and each assignment is reviewed thoroughly – there isn’t much more we can ask for. However, we must make it clear that we want genuine contractors to be able to benefit from limited company contracting well beyond April 2021. It certainly doesn’t seem fair to be on the receiving end of a rushed “inside IR35” blanket assessment, and nor does it seem reasonable to have clients turn their back on their highly skilled temporary workers because they’re lazy.
Umbrella companies are excellent at processing payroll, and if you’re inside IR35 – we recommend you use one of our top 10 umbrella companies. They’ll process your payroll compliantly and without any complications. However, if you’re genuinely outside IR35 – we urge you to raise your concerns with your client or recruitment agency and request an impartial IR35 assessment. After all – it’s only fair!