IR35: What to consider for your recruitment and Umbrella payroll function

After much speculation, chancellor Phillip Hammond has announced the implementation of IR35 in the private sector for April 2020 in the recent budget statement. The intermediaries legislation determines how a worker is engaged with a business for tax purposes; working outside as a contractor, or inside of the company as a PAYE employee.

The chancellor’s decision to delay the implementation of IR35 for the private sector until 2020 comes as a relief to many but planning to accommodate the new legislation into recruitment and umbrella payroll operations should begin now. With 12 months to plan ahead for the new legislation, recruitment agencies and umbrella companies of all sizes should now consider what impact the new law will have on their payroll operations and evaluate whether they have the right systems and processes in place to cater for the changes.

Merit Software Sales Director, Sam Radion says:

“This is an additional challenge for already busy Recruitment agencies and Umbrella companies. In an employment landscape that is already becoming more complex, the introduction of IR35 to the private sector will no doubt make day-to-day business more complicated for our customers”.

As a result of the new legislation, employment checks will become more stringent as contracts must accurately reflect the relationship between the business and the worker. Larger businesses will need to act quickly in evaluating their IT systems and recruitment payroll software suppliers to plan ahead for possible development work.

Sam continues:

“We know that another big change and added pressures for the recruitment marketplace is never welcomed, but a tried and tested payroll software system backed up by expert support can make things so much easier to manage such a change”.

Merit Software was first to market in adapting its system functionality to cater for workers affected by the previous IR35 legislation back in 2016. The functionality developed by Merit for recruitment agencies can already be used to cater for the upcoming changes in the private sector, benefitting current Merit customers across the UK and those seeking a premium payroll and billing solution.

Merit Software’s comprehensive product suite also means that it can provide a compliant solution for Umbrella companies, or those looking to start their own umbrella company to service recruitment businesses.

Functionality is one piece of the puzzle but having a UK-based support team in place enables Merit’s customers to manage payroll processes safe in the knowledge that they are supported by a responsive and experienced team.

With the new reforms set to be implemented in April, recruitment agencies who deal with the public sector are advised to check with their payroll software vendor whether an update will be in place ready for the new changes. Merit Software is offering no-obligation demonstrations of its award-winning system to recruitment agencies and umbrella companies who may be looking for a new premium payroll and billing solution.

To schedule a demonstration with one of our experts and find out how our system can help you prepare for the changes, simply contact us here.