Payroll insight
in public health such as dentists, opticians and locum doctors, where parts of their work may be covered because they are providing services to the NHS (National Health Service) and parts not because that is private practice. Ian Hodson: One of the biggest problems has been around the late notification and a lack of clarity as to exactly how the new rules will work operationally and the fact that responsibility internally can fall across a number of business areas. At the University we have found it a challenge to review our existing clients as we are looking to review information that is not held centrally by finance or HR in respect of the type of relationship that is in place with suppliers. This means that we have almost had to start from base-zero and go back out to the business and all the individuals who have or may have relationships with suppliers to educate them on the changes and flag the indicators of an IR35 relationship. To achieve this, we have had to work closely with our finance department whilst trying to understand the legislation ourselves from an operational perspective. The late development of the employment status service tool has not helped us as we clearly do not want to create our own version, and much of the education out in the workforce is really underpinned by the completion of the tool. We also engage individuals through third party agencies so have had the extra complication to deal with in respect of working through how the changes will impact on our relationship with them. Much of this work has been about determining who is responsible for key
face value, may well be trading as a personal service company without the end engager’s knowledge. Identifying potential suppliers that may fall foul of the extension of the IR35 rules to the public sector (and potentially to the private sector soon), can only be achieved by getting all suppliers to complete due diligence questionnaires. This is a difficult task because of the inevitable delays in getting suppliers to take the time to complete their requested questionnaires. Our company emTax, have devised such a questionnaire that asks suppliers, amongst other things, the number of participants in the supplier company, how many employees does the supplier company have, how long has the supplier been engaged for etc. The answers to these questions will enable businesses to identify which of their suppliers are required to be further assessed. Moving forwards, it would be wise for all new suppliers to be assessed in a similar manner. Also we are fairly confident that the new requirements placed on public sector bodies will shortly be extended to affect the private sector too. Forward thinking private sector companies may consider grasping this nettle early, by conducting a similar analysis of their own suppliers. David Paul: Public sector bodies are at different levels of readiness for these new rules. Some have invested a lot of time, including getting external input, into undertaking assessments and communicating early with contractors. Others have left it late and have less robust procedures in place. A number have even decided to take a ‘blanket approach’ and to simplify matters and reduce risk, treat all engagements as falling within the new rules – an approach that has a huge negative impact on contractor relationships. Where they are assessing IR35 on a case by case basis they are finding it challenging to obtain the resource internally to be able to assess the status
Duncan Groves, director and head of employment taxes, PSTAX
duties such as assessing the relationship and communicating with the individual. Ian Holloway: The on-going issue will be whether a body can identify themselves correctly as being a public authority/ sector employer or an employer that supplies contractors in the public sector. Not all employers will instantly look at the ‘meaning of public authority’ in Chapter 10 of Finance Act 2017 plus it is made confusing given that a public authority in the Freedom of Information Act 2000 (England, Wales and Northern Ireland) may not be instantly comparable with a public authority in the Freedom of Information Act (Scotland) Act 2002. Coupled with this is the fact that some public bodies operating cross-border in Northern Ireland are outside the scope of the 2000 Act. It may also be confusing that the definition of public authority may not be a public authority for the purposes of the employment legislation that brings gender pay gap (GPG) reporting for public sector England (which is already different from GPG in the devolved nations). In addition to identifying themselves as an employer liable to the new legislation, the further problem is the accurate identification of those individuals who could be liable to fall within the new legislation. This is proving time-consuming and, therefore, costly for employers. From my experiences, employers are choosing to ‘play safe’ and capture all employees who they think could be covered rather than the ones they know are covered. On the flip side, contractors in the public sector are choosing to work outside in the private sector. None of the above identifications are issues that a payroll service provider can or should get involved with. Understandably, this can lead to further frustration with clients. Jas Jhooty: Most businesses do not pay any/enough attention to the employment status of suppliers who are paid directly through the purchase ledger. A supplier company that may look legitimate at
Helen Hargreaves MSc FCIPPdip, associate director of policy & membership, CIPP
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| Professional in Payroll, Pensions and Reward |
Issue 31 | June 2017
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