This pro tip is for businesses that hire contractors.
Context
Using accurate information to make status determinations under the off-payroll working rules (IR35) is crucial. Incorrect information can lead to misclassification, disputes with HMRC and potential tax liabilities for non-compliance. Using the right tools and involving key personnel ensures your decisions are well-informed and consistent.
*Pro Tip* - Adopt a robust approach by using decision-making tools and the right processes.
Here's what you should do:
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Use Decision-Making Tools:
External Tools: External tools can help evaluate status, and deliver a consistent approach. But remember - it is critical to ensure accurate inputs.
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Involve Key Personnel:
- Hiring Managers: They have the clearest understanding of the worker’s day-to-day duties and control arrangements.
- Procurement/Legal Teams: Their role in drafting contracts means they are the best source to answer questions about the contractual obligations.
- Centralised Decision-Makers: For larger organisations, a central team can provide oversight and bring consistency to the process.
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Document Your Process:
- For each determination, maintain a clear record of:
- The status conclusion reached.
- Reasoning behind your conclusion.
- Supporting evidence and outputs from assessment tools.
- Communications with workers and supply chain partners.
- Retain this documentation to help demonstrate that your organisation exercised reasonable care.
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Train and Align Your Teams:
- Ensure all relevant staff understand your off-payroll process and key issues.
- Provide ongoing training to reinforce the importance of gathering accurate, complete information from the relevant stakeholders in the determination process.
Why this matters
Using decision-making tools effectively alongside a documented structured process reduces the risk of errors and challenges from HMRC. Robust processes not only protect your organisation from compliance risks but also establish a culture of transparency and accountability.
