Five ways to sense check you’re applying IR35 correctly
IR35: a thorn in the side of many in 2020/21. And with costly fines looming, it pays to get it right. If the thought of IR35 miscalculations and contracting is keeping you up at night, then we have some simple ways to sense check if you’re on the right track.
Check who falls inside & outside of IR35
If you’re still worried about whether the new legislation will affect your contractor, you can use the GOV.UK checker. This allows your contractor to check their employment status. Remember, as the employer it is your responsibility to apply IR35 legislation and pay your employees correctly and that the test is what happens in reality, not necessarily what you agree in writing between yourselves.
Separate your payrolls
We strongly recommend that payroll and off-payroll workers are paid via separate payrolls. We have determined that it is far better and cleaner to set up separate payrolls as certain elements of pay and dedications are not applicable to off-payroll workers.
For example, SSP, SMP and SAP are not payable, and no auto-enrolment pension should be applied. Whereas a standard payroll would be open for use in that manner, an off-payroll worker payroll would not be configured in that way. So, it is cleaner and far easier to operate in that manner.
Document your process
Whether you have lots of deemed employees or just a handful, it’s very important that you document choices and changes to your payroll. If you are to be investigated, you’ll want to prove that you’ve gone through the appropriate internal audits in order to adhere to IR35 legislation.
Communicate changes with employees and deemed employees
If you do need to make changes to an employee or deemed employees’ contract, method of pay or benefits they’re entitled to, then this will need to be communicated to the employee. Depending on your internal process, your employee may need to sign a new contract. It’s important to ensure that your HR department has this new contract and will be able to produce it upon request if needed. As some employee benefits accrue with length of service, being able to show very clearly when someone became a worker or an employee rather than a contractor could be important in the future.
Get an expert opinion
Like with all legislative changes, it often pays to get an expert opinion. If you don’t know your deemed employees from your regular nine-to-fiver’s and the four-letter word ‘IR35’ makes you scratch your head, then enrolling the help of experts can ensure you’re legislatively compliant and avoid those pesky fines.