IR35 – technology solutions
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IR35 identification
Organisations that continue to engage with PSCs following 6 April 2021 need to ensure that all PSCs onboarded are identified so that status assessments can be performed for all contractors engaged in this way. For organisations that sought to remove PSCs from their supply chain completely, checks will need to take place to ensure controls introduced to prevent onboarding have been and continue to be effective.
Organisations which have transitioned ‘inside IR35’ PSCs into new supply chain models may also want to obtain confidence that supply chains do not contain any serious risk of non-compliance (for example – in relation to potential ‘mini umbrella’ companies which were identified in a recent HMRC publication.
Our IR35 identification tool can be used to:
- perform a full check of a vendor supplier list at any point to identify potential PSCs
- perform wider supply chain validation checks to support identification of potential risk areas.
PSCs can be present in an engagement supply chain in a number of forms, including those directly engaged and paid by Accounts Payable (AP), and those engaged via intermediaries, such as agencies or other service providers. Identification may be supported by flags within AP/onboarding systems to identify these entities, but our experience suggests that even where this functionality does exist, it should be supplemented by a wider review, confirming how this operates in practice.
Deloitte has developed an automated methodology (our IR35 Identifier Tool) to risk assess potential PSCs from large vendor supplier lists. A variety of organisations successfully utilised this methodology in their preparations for 6 April 2021, and will continue to use this to identify PSCs periodically going forward as part of their “business as usual” processes. Our short video comments more specifically on how automation might help you with PSC identification. This video is relevant for all organisations which expect to perform some form of review of their vendor data, either as an ongoing part of their IR35 processes, or to validate or continue any identification work already undertaken.
Where an alternative policy approach has been taken to manage the IR35 rules (e.g. use of umbrella PAYE companies), our technology can also be customised to perform supply chain diligence exercises, such as to identify potential ‘mini umbrella’ arrangements to support any additional compliance checks/processes required.
IR35 Workflow tool
For organisations continuing to engage PSCs after 6 April 2021, IR35 processes need to be built into wider on-boarding/resourcing processes. IR35 Workflow is a standalone tool which can be implemented quickly and can support with:
- delivering a framework for a consistent IR35 assessment process and for efficient communication between on-boarding personnel, hiring managers, contractors and agencies/other third parties;
- enabling IR35 compliance steps to be met, including making a status determination statement (SDS), issuing the SDS as required and facilitating and managing any appeals against the SDS;
- delivering automated template communications and outcome messaging;
- providing a repository to hold details of pre-assessed roles (e.g. as part of the pre-April 2021 process) and supporting reasoning so that new hires can be matched to those roles where appropriate; and
- maintaining robust audit trails of all IR35 decisions made as part of overall strong governance procedures.
