Uniac - July 2022

16 resulting in financial loss. This issue is potentially more apparent within HEIs where status determinations are not managed by Finance but academic schools and faculties. • Lack of clarity over assessment results leading to inappropriate judgements over determinations from the CEST online tool. • Failure to maintain clear evidence supporting the rationale for an IR35 determination could lead to challenge and review by HMRC. • Contractors deemed to be inside IR35 when they believe they should be assessed as ‘outside’ (particularly where they provide services to other organisations which have been deemed outside IR35) could lead to a reduction in available workers for the institution. This could result in ineffective management of projects through lack of suitably experienced and available resource. Again, this is a potentially significant issue within HEIs where IT and Estates resource is engaged through contractors arrangements. • Failure to correctly complete and issue Status Determination Statements to individuals and contractors leading to non-compliance with post April 2021 requirements for IR35 assessments, hence the issue of this paper now. • Restricting the management of the IR35 compliance process to HR functions within the institution may result in key financial implications being missed through lack of appropriate taxation specialist knowledge. Given the above areas of risk to demonstrating IR35 compliance, the following are controls which we have seen in place in HE institutions which we consider are best practice in mitigating and managing risks should they crystallise: • Clear process documentation in place for IR35 assessments which sets out: i. the steps taken to undertake employment status determinations ii. guidance setting out the responsibilities for recruiters within the organisation in engaging external workers iii. how determinations of employment status for tax purposes should be made and recorded iv. version control to ensure processes are updated with changes to legislation on a timely basis. • A clearly defined methodology for the retention of evidence for each employment status determination made for workers engaged. This is vital in demonstrating the assessment was undertaken as required. From recent work undertaken with HEI clients, this was observed as a strong indicator of robust controls in place over IR35 processes. • Ensuring that the finance and taxation teams of the institution have an input into the management of the process for undertaking IR35 assessments, given that the principal objective of the legislation is to ensure that the Best practice for managing IR35 compliance

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