As of 6 April 2021, medium and large private sector businesses (which includes the charity sector) will have to comply with new off-payroll rules that enforce IR35.
This change was delayed from April 2020, due to COVID-19, and it also encompasses additional responsibilities for public sector organisations where off-payroll rules have been enforceable since 2017. The IR35 legislation and off-payroll working rules strive to make taxation more even between employees and ‘off-payroll’ workers.
For employers and what are termed ‘intermediaries’ (frequently agencies), the off-payroll rules entail a list of administrative responsibilities that they will need to manage. If there was ever a time to take on or upgrade your HR system, this is it. The latest Cloud-based modern HR systems takes a lot of the headache out of managing off-payroll rules, so HR and payroll aren’t bogged down in paperwork.
Let your business know you’re preparing for the changes
If your HR or payroll team hasn’t already done so, it’s important to tell all relevant stakeholders in your business about the upcoming off-payroll rules. Cezanne HR can help with this.
Using Cezanne HR’s workspaces, you can communicate what the changes mean, and tailor the message according to the workspace it’s posted on, too. The HR system can also send employees an email about the changes, or even an SMS if you perhaps want to issue a quick reminder closer to the date.
Using HR software for these communications allows you to easily run a multi-channel internal comms campaign to keep everyone up to date – and to reassure the business that your HR/payroll team has everything in hand.
Decide how you’ll communicate with relevant parties from April 2021
Communication is a core part of off-payroll rules. Businesses have an obligation to tell people if they have ‘determined’ them to be an employee or ‘off-payroll’. GOV.UK states, ‘You should communicate your determination using a Status Determination Statement (SDS).’
It is straightforward for businesses with Cezanne HR to keep a record of their SDS documentation, and to send it out to people as needed. If your organisation wants to request an acknowledgement that the documentation has been received and read, Cezanne HR’s e-signature functionality can facilitate this.
Determinations can be contested: ‘A worker or deemed employer may disagree with the employment status determination you reached.’ In that instance, Cezanne HR customers can use their HR system to find all the documentation relating to their original decision, and to keep a record of the dispute. The guidance specifically states that it’s necessary to ‘keep a record of your determinations and the reasons for them, as well as records of representations made to you.’
Who’s affected?
Before you start to make any determinations, your HR team will need a convenient way to discover all of the workers who may need to be assessed in terms of employment status. The most obvious place to start is by looking at the records you hold on contract types; though it’s worth bearing in mind that: ‘A contract for the purpose of the off-payroll working rules is a written, verbal or implied agreement between parties.’
You can use Cezanne HR to run a report on all the different contract types you have for your workers provided you hold details for all your headcount – employees, contractors etc. – in the system. Once you’ve eliminated the people who you know are definitely not affected by the off-payroll rules, you can extract a list of those workers who you may need to assess.
Going forward, you can add a new option in the ‘Contract Type’ drop down menu to easily identify your off-payroll workers, and ensure that any new starters are correctly allocated a contract type from day one. You can also add reminders to check contracts on a regular basis to ensure parameters haven’t changed.
Use workflows to manage new off-payroll processes
So that workers aren’t being assessed on an ad hoc basis, and to formalise how contested determinations are handled (organisations have 45 days to respond), HR will want to create some clear off-payroll working processes. These workflows should include each step that is taken, what documentation and communication is needed, reminders that should be set, who needs to be involved, and deadlines. Cezanne HR can help manage these new processes, including notifying and reminding people when things need to be actioned.
Are you in scope?
Businesses will need to check whether they fall into the scope of the new off-payroll rules, and be mindful that changing circumstances may bring them into or out of scope. Where a business is based and its size are the key factors for the private sector. Some public sector business types may also be exempt.
Cezanne HR can help businesses by making headcount numbers readily available. You can also set reminders in the system to regularly check whether your business’ scope criteria have changed so you don’t get caught out down the track.
To find out more about IR35, you may find these resources useful:
https://www.gov.uk/topic/business-tax/ir35
https://www.gov.uk/guidance/understanding-off-payroll-working-ir35
https://www.gov.uk/guidance/april-2020-changes-to-off-payroll-working-for-clients
Shandel McAuliffe
Now based in sunny Australia, Shandel is prolific writer and editor - particularly in the world of HR. She's worked for some big names, including the CIPD and the Adecco Group. And more recently, she's been the Editor for new HR publication HR Leader.