This pro tip is for businesses that hire contractors.
Context
When determining whether workers fall "inside" or "outside" the off-payroll working rules (IR35), organisations often pre-assess a role before the worker is known or a contract is signed to obtain an indicative status. Whilst role-based determinations can assist with the hiring process, it is essential to conduct an individual assessment once the worker is identified and contracts agreed.
*Pro Tip* - Use role-based determinations carefully and avoid blanket determinations.
Here’s how to ensure compliance while simplifying the process:
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Understand the Difference:
- Role-Based Determination: Pre-assessing a role before a worker is identified or contractually engaged to ascertain a potential status. Once the worker is identified for a specific engagement, an individual assessment should be completed.
- Blanket Determination: Applying the same status to all workers without assessing their specific circumstances. Example: Declaring all workers "inside IR35" regardless of differences in contracts or roles.
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Apply Reasonable Care:
- When using role-based assessments for multiple workers, ensure that the contractual terms and working conditions are identical for all those workers.
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Reassess When Needed:
- Review role-based determinations if working practices or contract terms change.
- If there are changes, then create a new role to be used, and keep the earlier one for audit reasons.
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Tools For Automation:
- External status tools such as IR35 Shield can help you build role-based determinations to pre-assess potential engagements.
Why this matters
Role-based determinations can streamline compliance for similar workers, saving time, providing consistency, and reduce complexity. However, ensure the approach is carefully adopted, and avoids the pitfalls of blanket determinations.
