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Using PSC contractors after April 2020

4th Feb 2020
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The countdown to changes to off-payroll working in the private sector is now firmly underway – and HR strategists have just weeks to prepare for the new rules.

While HMRC has launched an eleventh-hour review of changes in a move ‘to address any concerns from businesses and affected individuals about how they will be implemented’, the reality is that this announcement – at this time – has the potential to create even more confusion. Make no mistake: these reforms will almost certainly go ahead. Indeed, there is certainly a feeling among some that this is just a formality, with the Government obliged to follow through with a commitment that The Chancellor made publically last year during the run-up to the General Election. Essentially, with just weeks to go until the changes are implemented, we are now at a point where we don’t have any certainty around final legislation or any firm guidance from HMRC.

The fact that, in recent months, many big name employers – including HSBC, Vodafone and GSK – have imposed blanket bans on PSC contractors will also have done nothing to ease the concerns of HR leaders who currently engage individuals working through this model. However, there is no reason why companies should not continue to engage genuine PSC contractors after April. It is worth bearing in mind that even when using HMRC’s own figures, the majority of people working in this way are self-employed and sit ‘outside’ IR35.  

That said, it is absolutely crucial that businesses begin preparing for the new rules now. A survey of APSCo’s membership, undertaken in December 2019, revealed that although more than three quarters (79%) of the professional recruitment firms polled believed that most of the businesses they work with were aware of the incoming changes, just 51% said the majority of their clients were actively preparing for the updated legislation. Those who are hanging on for the legislation to be published before taking action will not have time to put adequate plans in place.

Companies which haven’t already must urgently review their existing contingent workforces to determine what employment models these individuals are working through to understand the extent of PSC contractor usage. They should then work with trusted recruitment partners to discuss which roles are likely to be in scope across different levels, and if individuals with these skills are thin on the ground or easily replaced, so that plans can be put in place to enable them to sustain and grow future workforces effectively.

There is no doubt that flexible resource is a valuable element of a business’s talent ecosystem: through engaging non-permanent professionals, HR teams can adapt to meet fluctuations in demand and bring on board specialist skills they would be hard pushed to acquire on a permanent basis. Good recruitment partners will be able to help place genuine contractors after April 2020 and advise on ensuring that these engagements are compliant and without risk. Yes, high-profile bans on PSC contractors may be making headlines, but other employers including Morrisons, EasyJet and Toyota have announced that they are assessing their contractors’ IR35 status already and individually, on a case-by-case basis – and there is no reason why other HR directors shouldn’t follow their example.

I recently met with Jesse Norman, Chief Secretary to the Treasury, where we discussed the concerns our members have shared around the incoming changes. Many of the end clients APSCo members partner with continue to face challenges around the timetable for the implementation; the accuracy of the CEST Tool for making status determinations; and the issue of third party compliance. If we’ve learnt anything from the public sector roll out, it is that we are now entering a period of significant change. However, by working with expert recruitment partners, businesses can ensure that they navigate the new landscape easily.

 

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