IR35 for the Process Industries

Member News

E3 Recruitment (E3R) is hosting an event in association with Brookson Legal on the IR35 Reform, a new legislation which will come into force on 6th April 2020.

The event which takes place on Thursday 27th June 2019 has been put on specifically for the process industries for E3R’s partner CATCH, an industry led partnership which supports the engineering, process, and renewable industries in the Humber region.

The event will give businesses an opportunity to find out how to avoid pitfalls from IR35 with their contractors, and an opportunity for contractors to find out what IR35 means to them.

E3R Director Andrew Pilling commented on the event: “The process industries are reliant on contractors as they offer the skills and experience required to work on complex projects both compliantly and quickly, removing stages of the recruitment process. IR35 will impact how these businesses work with contractors long-term, which is why it is important to put on this event, ensuring businesses are equipped with all the information needed so they can act on IR35 accordingly.”

So what is IR35? From April next year the obligation to assess employment status for tax will move from the contractor to the hirer/end user. The employer will need to exercise reasonable care when determining the IR35 position of any limited company contractor.

An IR35 assessment process either managed internally or with external specialist support is required to ensure the status decision is correct. Blanket bans on the use of limited company contractors or blanket IR35 assessments should be avoided, although grouping roles together for the purposes of assessing status is acceptable.

According to research conducted by co-host Brookson Legal, more than half of UK businesses are considering taking a ‘blanket approach’ to forthcoming IR35 changes because they do not have time to assess cases on an individual basis.

The poll of 502 UK businesses found 59 per cent were considering a blanket approach to managing the legislation because they did not have time to assess contractors individually. By comparison, just 41 per cent said they would not take this approach as they feared losing contractors if they were wrongly assessed.

The research, conducted by Brookson Legal for its report IR35: A Ticking Timebomb, also found a majority of businesses were confused about the potential implications of changes to off-payroll rules.

Only 47 per cent of organisations said they had taken steps to understand the upcoming legislation and already knew the percentage of contractors that would fall inside IR35. Conversely, more than a third (38 per cent) said they were “relying on gut feel alone” when it came to IR35 and its impact on their business, and another 15 per cent said they had “no idea at all” how off-payroll rules would affect them.

Brookson Legal’s research found almost three out of four (73 per cent) private sector employers believed IR35 would have an impact on the number of contractors they hire, of which 48 per cent said it would encourage them to reduce the number of contractors.
Similarly, 39 per cent said they expected there to be fewer contractors available to hire and a third (33 per cent) of employers feared they would lose skilled contractors because of IR35 – echoing the findings of a previous survey conducted by CIPD and IPSE last year.

Joe Tully, Brookson Legal MD, “The main message coming from our research is that most businesses are unprepared and therefore fearful of the new rules.  With ten months to go until the legislation takes effect businesses should be taking every opportunity to learn about what the new rules mean for them and to put in place processes to manage their new obligations.  Those businesses that act now will have a clear advantage over competitors who wait until later in the year.”

The IR35 for the Process Industries event is on Thursday 27th June 2019 at the CATCH Head Office in Stallingborough, Grimsby and runs 10am to 12:30pm. To register to attend this event please contact Laura Rogers by emailing: [email protected] or call 01484 645269.