Navigating IR35 determinations: unravelling the role of responsibility

By Jessie Davies


IR35: business considerations

IR35 legislation in the UK has become a focal point for businesses, HR professionals, and hiring managers. IR35 was designed to tackle the issue of "disguised employment," helps to solve this by placing the responsibility of determining the tax status of contractors on the shoulders of businesses taking on their services. 

However, the question of who has the final say and overall responsibility in IR35 determinations still starts debates within organisations. Here, we take a look at the roles of Compliance, HR, and Talent teams in the IR35 determination process, and outline how businesses can find success with managing the legislation.

The compliance conundrum

Compliance teams within organisations are a critical part in ensuring adherence to various regulations and laws. For IR35, compliance experts need to interpret the legislation and assess its impact on the company’s engagement with contractors. They are responsible for staying abreast of any changes in regards to legal and they understand how these changes may affect the determination process.

And whilst compliance teams hold a role in providing guidance and expertise, the final say in IR35 determinations may not solely rest with them. This is due to the complexity of individual engagements, and the nuanced nature of employment relationships. Often requiring input from other departments.

Does HR manage IR35?

HR teams and professionals are closely involved in the day-to-day operations of managing personnel within an organisation. Their knowledge of internal structures, employee relations, and workforce dynamics position them as key contributors to the IR35 determination process. HR teams work closely with hiring managers and the business to understand the nature of contractor engagements, and ultimately assess whether they align with the expectations set by IR35.

HR's involvement extends beyond mere consultation. They contribute valuable info about ongoing working practices and contract arrangements, which provides the necessary context for IR35 assessments. However, despite this, HR also may not bear the sole responsibility for the final determination. 

Talent teams, agencies, and the contract economy

When it comes to contract work, talent teams are important players in the IR35 determination game. The expertise they can offer comes from understanding the evolving nature of work relationships, especially when it comes to engaging freelancers, consultants, and other contingent workers.

Talent teams and agencies understand the skills needed for the role and facilitate communication between the business and the contractor. Their input is invaluable in understanding whether the working practices align with the expectations outlined in IR35. However, just like compliance and HR, the final say in IR35 determinations often involves a collaborative effort that draws on the knowledge and experience of each department.

Collaboration remains key for IR35 navigation

Determining IR35 status is not the exclusive domain of any single department. The complexity of the legislation and the nature of a contractor is reflected in the need for a collaborative approach. Compliance, HR, and Talent teams must work together and leverage their expertise to arrive at well-informed and legally sound determinations. And whilst these grouped departments all contribute to the IR35 determination process, the responsibility for the final say rests on a collective effort. 

If you find yourself needing clarity on managing IR35 in your workplace, please get in touch to find out how TRIA has successfully navigated this in the past, and how we can navigate these regulations for you.