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Challenge

Our client operated with a high volume of contractors across a range of roles and were contracted and managed directly through Star OUTiCO as their RPO / contingent Recruitment partner.

  • September 2019: 63% of the contractors were operating as Limited Company Contractors (LCCs)
  • New IR35 legislation (April 2020) to ensure contractors pay the same Tax and National Insurance contributions as an equivalent employee
  • IR35 changes for private sector contractors transfer responsibility from contractors to large and medium companies to assess IR35 determinations
  • Increased workload, responsibility, and financial risk to end users of contract workforce
  • Lack of clarity around impending legislation across the UK a major concern for the client – concern that they might lose talent and skills of LCCs in scope of new legislation

Solution

Strategy for IR35 to be rolled out across the business in readiness for the changes:

  • Conducted due diligence looking at the HMRC CEST tool and guidelines for implementing a compliant IR35 process
  • Explored the HMRC CEST tool and four outsourced companies that had already dealt with IR35 changes in the public sector
  • Identified a provider who had a compliant, robust and tried and tested system for evaluating and recording status determinations
  • Partnering with this outsourced organisation gave the client piece of mind and indemnity insurance if challenged by HMRC
  • Presented strategy to the HR team and had agreement that we would commence with an implementation plan with a phased approach within agreed timelines: resulted in several Hiring Manager and Contractor workshops within the UK & USA to educate and communicate the process and timelines
  • Presented live data to HR teams weekly and several contractors deemed as INSIDE IR35 were converted across to a PAYE contracts
  • LCCs deemed as OUTSIDE IR35 allowed to continue on their current contracts
  • Contractors that decided to leave due to IR35 implications were back filled by PAYE contractors

Impact

  • 63% LCCs in Sept 2019 moved to 26% LCCs by 1st April 2020
  • £300k of savings made to the end client from changing from LCC to PAYE contractors
  • New policies and procedures created for all future recruitment and engagement
  • Managed and maintained by Star OUTiCO on behalf of our client
  • Compliant and ethical approach to IR35 across the business: client commented on the hard work and outstanding delivery – they feel this was a highly successful project, designed and delivered by Star OUTiCO

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