Nétive’s plan for IR35

At Nétive VMS we have anticipated this reformation by supporting the ability to track IR35 in our system.

IR35

IR35, originally announced in 1999 by the then Inland Revenue, was designed to incorporate measures to counter tax avoidance by the use of so-called “personal service companies”. In April 2020, new changes to the IR35 legislation will be implemented in the UK. Following the public sector (for which IR35 has been in place since 2017), HMRC is now extending the legislation to the private sector as well. In addition to this, the responsibility for enforcing the IR35 tax legislation will shift to the end hirer. Naturally – this presents a significantly increased exposure to risk for hirers, and makes it crucial that they implement the appropriate changes to their processes to ensure IR35 compliance.

Confusion over applying the new measures in the private sector has caused many companies to avoid the risk entirely. Several – including HSBC, Barclays, RBS and GSK – have explicitly said that they will no longer employ off-payroll workers. We believe evasion and/or avoidance is not a solution, particularly in times of tightening labour demands.

How has Nétive prepared?

Nétive has appropriately prepared for the changes in IR35 legislation, and has added a variety of functional items to ensure we can support our partners and clients in their own journeys to IR35 compliance.

We have included functionality that allows for the permissioned and appropriate users to specify whether or not assignments are covered by IR35 and to record the repeated verification test. This IR35 functionality can be made available by a configuration change, and can be incorporated to relevant programmes. 

It is critical to note that Nétive has not incorporated IR35 status determination. Instead, users will be prompted, in line with the workflows and approval processes that are configured, to either complete the status determination through the government gateway, or through a 3rd party system. Nétive will then incorporate the relevant IR35 determination certificate as part of the ‘digital file’ associated with the assignment. This ‘digital file’ will then be linked with the appropriate approval steps determined during configuration. We have also developed a number of fields across assignments and job requisitions to allow for the relevant IR35 variables and information to be recorded and made visible.

So in short we have made the IR35 status within the Nétive system visible, and incorporated the appropriate workflows and approval processes to ensure IR35 compliance, though the actual IR35 determination is to be made elsewhere.

Functional Developments

Once IR35 has been configured and activated within an environment, the following options will become available:

  • On the Customer Card there is a section ‘laws and regulations’ available. Here you can indicate whether the IR35 is applicable to the customer. It can also be indicated whether a client is exempt from the IR35, even if the client is subject to British legislation.
  • A section IR35 is available on the Job-Requisition which is only shown if the IR35 is applicable to the client. Here the status of the IR35 can be specified, including review date and review result (by adding an attachment or filling in a comment field). The details of the IR35 are visible to suppliers in the Job-Requisition so that they can take this into account when offering candidates.
  • A section IR35 is available for the Assignment, which is only shown if the IR35 is applicable to the client. Here the status of the IR35 can be specified.
  • The option ‘IR35 status’ has been added to the Dossier creation template to select the most suitable template. When setting up a Dossier creation template, this allows you to indicate whether the template should be applied if the assignment is inside or outside the IR35.
  • A document type IR35 has been added. This allows you to set the review on the IR35 to be repeated periodically. After expiry of the set period, a notification is sent to the hiring manager or the hiring desk employee (task or email notification).
  • When creating an Assignment from a Job-Requisition, the data on the IR35 is copied. The status of IR35 is filled, and if a Document of the Document Type IR35 has been created in the Digital File of the Assignment, the attachment is copied from the Request to this document.

IR35 Update – 2021 delay due to Corona Virus

As you will know by now, IR35 across the private sector has been delayed to 2021 due to the current global crisis. Nétive has planned, prepared and implemented IR35 as part of its core considerations. So whilst legislation doesn’t change until 2021, it doesn’t mean you cannot get ahead of the curve, and enter April 2021 with a clear mind.