What does IR35 mean for recruitment companies looking to respond to a tender?

The off payroll working rules – commonly known as IR35 – were introduced by HRMC in 2000 to tackle tax avoidance by workers supplying their services to clients through an intermediary. Such workers are referred to by HMRC as ‘disguised employees’ as they don’t meet the HMRC definition of self-employment and as a result tax and National Insurance Contribution (NIC) aren’t paid correctly. The rules are designed to ensure workers, who would be classed as an employee if they were contracted directly, pay broadly the same tax and NIC as employees.

If a worker is deemed ‘inside of IR35’ they are required to pay tax at the same rate as an employee in the appropriate pay bracket. If they fall ‘outside of IR35’, they are considered self-employed and can tax themself. Those ‘outside of IR35’, are responsible for paying their taxes on time.

‘Deemed employees’ do not reap the same benefits as typical employees. For example, those who fall into IR35, pay the equivalent in tax of a typical employee but are not entitled to sick pay, holidays or pensions.

How is IR35 changing?

The rules of IR35 are not changing, but the administration of the legalisation is.

It is proposed that the assessment of whether IR35 applies will fall onto the private sector end user of the worker’s services for all payments by medium and large businesses from 6 April 2021.

Where the end user decides that IR35 does apply, the fee payer – which may be the end user, a recruitment agency or a third party paying the intermediary – will be responsible for accounting for and paying the related tax and NIC, including the additional cost of employer’s NIC, to HMRC.

The new rules apply to private sector medium and large businesses who are the end user of the worker’s services and to the fee payer, if different, such as fee payers in the recruitment sector.

Small companies are exempt from this legalisation but public sector companies are not.

How will this proposed change impact businesses in the recruitment sector?

If you supply a worker who provides their services through an intermediary to a client in the public sector now, the client must decide if the rules apply. They must pass the determination to the person or organisation they contract with.

If you supply a worker to a client in the private sector, the worker’s intermediary must decide if the rules apply and pay the tax and National Insurance due. The private sector includes third sector organisations, such as some charities.

How does IR35 affect tendering?

IR35 is a concern for lots of employees due to the change in accountability of who needs to make the judgment as to whether the employee is inside or outside of IR35.

As a bid partner to recruitment clients, at K Low Consulting we are noticing a lot more recruitment tenders want to test and scrutinise the supplier’s knowledge of IR35, especially if the contract is outsourcing the management of recruitment processes. Commissioners need to be assured they will not be at risk of financial penalties. Essentially, commissioners are looking to see if the bidders are IR35 compliant.

It is important to identify how IR35 will affect procurement. You should analyse IR35 at your own risk. Having a long-term strategy in place will allow you to be prepared for IR35. Specifically, understanding how to use contractors and procurement interims under the IR35 legalisation will ensure visibility and control.

What should recruitment companies do?

To make sure you can demonstrate your knowledge of IR35 in recruitment tenders it would be advisable to:

  • Assess the current arrangements for your clients and identify the number of workers supplied who operate via off-payroll status
  • Decide who in your organisation will make IR35 determinations and how payments will be made to contractors within the off-payroll rules
  • Identify which clients are outside the rules through not meeting the criteria to be classified as a medium or large business
  • Review internal systems, such as payroll software, process maps, HR and onboarding policies to see if they are up to date.

If you need help with the questions you may be asked on tenders in relation to IR35, get in touch today to see how we can assist you.

Contact info@klowconsulting.com or give us a call on 0330 133 1041.

Looking ahead to 2020: A successful year for K Low Consulting

Reflection on 2019

We’ve had a great year at K Low Consulting and are excited about the new year ahead! In this article, our team reflects on 2019 and looks ahead to the future of K Low Consulting.

In 2019, we have experienced significant and rapid growth. We have expanded our associate team, which includes bid professionals with significant writing and management experience, senior clinicians and specialist advisors, such as quality management and accreditation. Our team has been in high spirits throughout the year, keeping up with client demand and workload.

An intern from Nottingham Trent University’s graduate scheme, Mia Penny, was employed as a ‘Marketing and Tender Executive’. With the help of another associate writer from the team, Victoria, they have experienced some fantastic marketing wins in 2019.

“From September 2019 I joined K Low Consulting as a ‘Marketing and Tender’ intern after studying a master’s degree in Media and Public Relations at the University of Leicester. Since joining, I have been involved in different aspects of the business and have benefitted from hands-on experience from the outset. Krisja has helped me in developing my skill set and has guided me when learning new skills. Shadowing Krisja and being heavily involved in daily business activities has been challenging but exciting! I have particularly enjoyed being involved in Marketing the company and launching the website, which has resulted in some fantastic marketing wins at this early stage! I’m looking forward to the year ahead and seeing where my role at K Low Consulting takes me.”
-Mia Penny, Marketing and Tender Executive.

Wins of 2019

Within our first year, we have had some fantastic results. Our STATS have been evidence of our work this year,  we have had circa. 88% of client wins, 90% client retention and delivered 615% social return on investment for an £800k contract.

We strive to strengthen current partnerships with our clients in 2020, helping them to win more high-value contracts and develop their organisations even further. Looking ahead to 2020, we’re seeking to create more partnerships and build our client base.

Progressing on to a digital landscape, 2019 saw the launch of our website and social media accounts. Since the launch, we have had some remarkable results, including being on the first page of Google within 5 weeks of the website launch.

Some Testimonials from 2019

“Krisja and his team are knowledgeable about the Education industry and approached the tender in a systematic and organised manner. Although there was a tight deadline, they went above and beyond to involve themselves with our organisation and gather as much information as possible to produce an excellent tender response. They provided a fresh input into any potential issues and identified these in the early stages. For our most recent project with Krisja, we have been invited to the next stage and we are confident that we will win the tender. I would recommend Krisja and his team to anyone, and plan to work with him in many more projects in the future. Thanks again for the hard work.”

-Business and Resources Executive, Educational Establishment.

“… Thank you so much for the effort you and your team put in.  You kept us on track throughout the submission process and although we only had a short amount of time to work on this tender, you covered every answer in-depth & we were very pleased with that we had pulled together!  Pleasure to work with.”

Chief Executive Officer, Specialist Social Care Recruitment Provider.

“This is the second NHS dental tender we have worked with Krisja on. We won the first and are very confident of our chances on the second. He is always professional, diligent and flexible. His knowledge and input on healthcare bid strategy, delivery models, and commissioner perception is excellent. He always goes beyond compliance, to find creative ways of making our proposal the very best it can be!”

Practice Director, Dental Practice Group.

Click Here to See More Testimonials

Some outstanding wins in 2019

A glimpse into 2020

In 2020, K Low Consulting plans to continue assisting our clients to produce outstanding results. We carry through our ethos and values, continuing to win tenders for clients. There are also plans underway to deliver tender and funding workshops to Practice Managers after partnering up the Practice Managers Association (keep an eye out on details to follow!).

We’re also heavily involved in with the development and launch of an innovative Healthtech tool, MSK Gateway. This tool supports GPs to reduce appointment time, improve patient experience and outcomes. It enables GPs to manage their patients better by assigning them tailored exercises based on their symptoms. This year the tool will be launched into pilot practices, thus, we are looking for partner practices to use the tool to improve patient experience and outcomes. Check out the video below to see a promotional clip for MSK Gateway.

Contact Us Today

If you need help with tendering, give us a call today to see how we can assist you. Contact info@klowconsulting.com or give us a call on 0330 133 1041.