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Posted 7th December 2020

What public sector changes could tell us about private sector IR35 reforms

2020 has presented businesses and workers throughout the UK with countless challenges, from the COVID-19 pandemic to Brexit considerations, and now many businesses (particularly recruiters) are facing the added challenge of preparing for IR35 reforms.

Set to come into force in April 2021, after being postponed in April of this year due to the pandemic, private sector reforms will see the responsibility and liability for determining a contractor’s IR35 status switch from contractor to end hirer.

These same reforms were introduced in the public sector back in 2017, resulting in a number of issues for both contractors and agencies working within the sector. So, what can we learn from past mistakes with regards to these reforms to ensure processes adapt seamlessly come April 2021?

Lack of preparation

First and foremost, there was a distinct lack of preparation for public sector reforms in 2017. This meant that many agencies and end hirers could not comply, as they simply did not understand the legislation and their liability with regards to the reforms. Many of you may have already begun preparations for how these changes will impact your business. With only weeks to go before they were set to be introduced this past April, we had spent months supporting our agency partners to prepare. Now set to come into force in just a few short months, we are once again helping our agency partners with their preparation so that they clearly understand the options available to their business.

Blanket assessments

As one of the most publicised errors by companies during public sector reforms, blanket assessments meant that countless agencies were non-compliant and faced significant backlash from contractors. A blanket assessment means that the agency or organisation has made an IR35 status decision for multiple contractors at once, without scrutinising each contractor on a case by case basis. This resulted in contractors taking businesses to tribunals to recoup moneys lost from being placed under the wrong status.

CEST

The mistakes made in the CEST tool is something the government has had to learn from following public sector reforms. Designed as an easy-to-use tool for agencies to identify a contractor’s status, it was ultimately deemed unfit for purpose and led to inaccurate decisions. Since 2017, CEST has been re-designed, taking into account feedback from experts across the industry. Whilst we welcome this revamped tool, we would still highly recommend you have your own internal processes to identify status also to ensure they are correct each and every time.

Are you looking for support with IR35 reforms? Speak to our team today to find out more about how Exchequer can help.

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