Speaking With The Experts - IR35 With Granite BPO

Bringing up the topics of HMRC and the changes to IR35 is almost always met with a groan – and trust me, we are right there with you… but…

Whilst this may not be the topic of choice, it is an important one.

Set to come into practice this April, these new regulations will inevitably affect companies, contractors and recruitment agencies alike. 

So, after questions from both our clients and network of contractors, we thought it was time do some more in-depth research of our own, speak with industry-leading experts, and share some insights in a series of blogs in the lead up to the changes being implemented.

Granite BPO, being one of the companies we spoke with, has quickly become one of our go-to sources on how best to address the new changes due to their wealth of knowledge and experience paired with a personal approach that rings true with our own ethos.

With this in mind, we decided to put a few questions to their Co-founder and Managing Director – Jovan Pavlicevic to give his thoughts on how these changes will affect companies and their contractors and get the topic off to a start:

What does this mean in practice for the contractor & client?

If clients want to allow workers to use PSCs (Personal Service Company) post-March, there's a bit of admin involved in getting your ducks in a row. Clients will want to get it right, as the primary change in April is the responsibility shifting to them, instead of the worker. This shift includes the ultimate financial liability, as well. 

If PSCs remain in use, clients need to issue and distribute an SDS (Status Determination Statement) for each worker (and would be well-advised to issue one for each assignment or any time there's a change in working practice too). The first step is a workforce audit to analyse risk. We've got templates to help with all this. 

(Pro-tip: start chipping away at the problem early by checking contract roll-over dates. If you have a PSC assignment finishing up in Feb, that's the time to reassess, rather than automatic renewal simply to kick the can down the road by a month.)

What are the main issues you foresee arising?

The single biggest point of friction will be those contractors who aren't happy about their limited company (effectively) being banned. Some will remain ltd of course. But with HMRC's view being that 90% of PSCs are non-compliant with IR35, that gives an indication of the likely numbers who'll be moved off their PSC whether they like it or not. The decision (as well as the financial liability) is simply no longer the worker's. 

That 90% view from HMRC also tallies with our decades of experience. Non-compliance (whether through outright fraud, laziness, misunderstanding or lack of awareness) really is that widespread. Successful clients are those with a solid comms plan to manage the change. 

Are there any advantages to the new regulations?

This is a great question because it's actually not all doom and gloom - workers transitioning away from the PSC find quite a list of benefits but no one really talks about them! No more accountant, no more VAT, additional bank accounts and logins, expense tracking and various insurances - the list goes on. All that stuff evaporates and they now just get paid. 

Added to that, things like mortgage and finance applications suddenly become a breeze, and that time spent administering the old PSC becomes free time (Ironically that freedom was usually part of the glamorous allure wrapped into the PSC sales pitch). 

If the comms are handled well, and these benefits laid out, that big pain point above can be smoothed out very nicely. 

What solutions do granite offer for contractors and clients?

As well as a range of consulting services for all Foundations clients (workforce assessment, risk assessment, SDS preparation, candidate communications, whitepapers and more) we offer the full suite of employed solutions. From PEO to umbrella, we have decades of time served in this space and we're professional passport qualified, so you can rest easy on compliance. 

Where we thrive though is bespoke solutions. In a cookie-cutter industry, we love 'getting under the skin' of a business to really understand what makes them tick - their purpose and their unique challenges. From that starting point, we piece together winning campaigns and craft smooth transitions, ensuring happy clients, happy candidates and long-term relationships. 

How soon does the process need to be started to ensure they are set up in time to meet the new regulations in April?

Two words... Start now! It'll be a bit of a bunfight come March / April, and there are only so many of us to go around. With 230,000 PSCs in the sights of HMRC, it’s a significant task and a generational shift in the world of work. We're happy to help, just please don't leave it to the 11th hour... 

Over the coming months, in the lead up to the changes, we will be putting out more information on this, but in the meantime, if you would like to get our insight on hiring and contractor employment or more information from Granite regarding their services Contact Us and let’s have a chat.