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IR35 testing software designed for Private Sector IR35 reforms

15 May 19 | By: Jas Jhooty

Introducing IR35 Shield

IR35 Shield is an enterprise level cloud-based IR35 testing software solution that can quickly and accurately assess your entire workforce to fully meet the new requirements brought in by private sector IR35 reforms. Unlike HMRC’s Check of Employer Status Tool (CEST), IR35 Shield considers every single employment status indicator to automatically deliver an accurate employment status determination

IR35 Shield incorporates cutting edge Artificial Intelligence algorithms to automatically assess the true employment status of all of your off-payroll workforce to help facilitate evidence-based policy decisions, keeping your business both compliant and competitive.

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Real-Time Compliance

Real time

IR35 Shield facilitates large-scale audits by inviting and managing the employment status assessments of entire workforces. Results are delivered in real-time, highlighting tax risk financial impact, helping clients make profitable, evidence-based policy decisions.

Fast

The IR35 tool asks workers more than 100 questions about their engagement, with assessments typically taking around 20 minutes. Its ability to simultaneously manage an infinite number of contractors means we can assess your entire workforce in a few hours.

Accurate

Each assessment is underpinned by a detailed examination of up-to-date employment case law. The tool mimics the approach of a legal expert, guaranteeing a balanced and thorough assessment. The fact that it delivers the correct result for all existing IR35 court cases is testament to its accuracy.

Consistent

The system’s algorithm consistently and rigidly applies the same IR35 and employment status case law tests to each assessment. Its automated nature means there is no risk of test results being skewed by human error or bias.

High volume

An employment tax consultant can only process a finite number of status reviews during their lifetime. Shield, with its Artificial Intelligence (AI) capabilities, can process the equivalent of a human expert’s lifetime work in a single day.

Support

Where further certainty is required to explore any remaining risk, our experienced employment tax consultants are available. Each of our consultants has over 30 years of employment tax experience having previously worked within HMRC and PricewaterhouseCoopers. We can provide you with as much support as you need.

IR35 Audits

The most efficient and effective way to manage IR35 assessments and maximise your compliance.

Assessments

After setup, clients can invite their entire workforce to complete an online assessment within minutes. Shield manages the audit process, accompanying individual status assessments with a workforce risk assessment and detailed tax calculations to help clients gauge risk.

Business Intelligence

Once the status assessments are completed, IR35 Shield will have provided clients with a comprehensive understanding of the scale of any issues and associated risk. This newfound knowledge can then inform strategies to help minimise disruption to ongoing projects.

Big Data & Reporting

The data captured is substantial, but easy to digest. The solution is capable of mining data to spot outliers, recognise patterns, make comparisons against tens of thousands of other contractors in real-time, or produce breakout reports for particular departments, projects or skill types.

Forecasting

Clients can use the platform’s forecasting capabilities to conduct ‘what-if’ scenarios. For example, to establish the financial impact of adopting changes in working practices, or altering contractor rates. This invaluable foresight helps inform planning around IR35 compliance.

Address immediate issues

By auditing a client’s workforce, IR35 Shield enables them to quickly ascertain the challenges they face as the new legislative changes approach. The resulting measures taken will help to deliver compliance certainty and protect all parties in the supply chain.

IR35 Shield’s Real Time Compliance Suite can be used to invite thousands of workers to be assessed. It will then identify and track the assessments, before delivering the results in real-time as they are completed.

Shield’s reporting and forecasting features can help clients drill down into the detail and make evidence-based policy decisions, highlighting any immediate risk.

Continued compliance

Once clients have resolved the initial challenges with an audit, they can continue to use the IR35 Shield Compliance Suite to assess and manage new workers. The compliance details for historically engaged workers will be retained in the system so that clients can demonstrate due diligence in the event of a future compliance check by HMRC.

The IR35 Shield Compliance Suite is also adaptable to future developments in case law. Should new precedents be set in court, or subtle case law clarifications be made at lower tier tribunals, the system can be extended to run ‘what-if’ scenarios to identify the potential impacts of these changes on a client’s existing workforce.

Status Testing

IR35 is based on notoriously complex and subjective employment status case law. It’s so complicated that HMRC status inspectors, employment lawyers, and tribunal judges often find their decisions subject to appeal. This is why Renoir was created – the name given to the AI-based algorithm at the centre of IR35 Shield and the assessment process.

Fast

Renoir provides an immediate evaluation based on answers provided to more than 100 multiple choice questions. Each answer is processed in real-time and weighed up in terms of comparative importance. Upon completion of the questionnaire, Renoir instantly delivers a determination on a 19-point risk scale, between IR35 ‘applies’ and ‘does not apply’.

Consistent

Renoir takes the holistic approach to evaluating IR35 status, rigidly applying the correct legal approach to each individual assessment. Each factor is carefully evaluated and considered as part of the bigger picture, Renoir is a model of consistency.

Accurate

Renoir‘s comprehensive understanding of current employment case law is applied to each assessment undertaken. Critically, Renoir adopts the same approach a tribunal judge would take when evaluating IR35 which ensures an accurate assessment. This is evidenced by the fact that Renoir’s outcomes are consistent with all existing IR35 court cases to date.

Unbiased

Renoir’s assessments eliminate human error or bias. Having been designed to evaluate all employment status factors and their contextual importance, as well as programmed to adopt the same unyielding approach when carrying out each assessment.

The Testing Process

Overview

Being able to provide fair and accurate IR35 assessments is key to keeping your business compliant and competitive. However, many organisations are held back by the perceived compliance burden associated with manual IR35 assessments.

By harnessing the power of AI, Shield provides assessments akin to those of an IR35 legal specialist, while simultaneously managing an infinite number of contractors. For organisations engaging large quantities of contractors, a process that would typically take hundreds of man-hours to complete is suddenly resolved in a matter of minutes after tests have been completed.

Testing service explained

Contractors are invited to access the test online. The test asks more than 100 questions to build a comprehensive understanding of the working relationship between the contractor and the hirer.

Some questions are conditional, based on previous answers. Certain questions can be answered ‘don’t know’, which is taken into account when determining the assessment result.

The answers are analysed by Renoir, the bespoke AI-based algorithm. Renoir is continually refined in accordance with the latest IR35 tribunal cases, taking the same holistic approach as a tribunal judge. Having instantly analysed the answers, Renoir determines the contractor’s status, or level of IR35 risk, along a 19-point scale ranging from ‘IR35 applies’ to ‘IR35 does not apply’. Accompanied by bespoke commentary based on a detailed legal analysis of the answers.

Renoir creates a comprehensive 20+ page test report, containing details of all IR35 factors and tailored compliance observations, which clients can use to mitigate risk and inform IR35 status decisions.

Return on Investment

Without utilising IR35 Shield, clients will not be in a position of being able to conduct accurate and reliable employment status assessments. An illustration of the additional costs to businesses from April 2020 when IR35 reforms come into force follows:

Estimated 100 contractors paid £100,000 per annum

Total annual contractor bill
£10,000,000

If all inside IR35 additional 14.3% payable – 13.8% ERs Class 1 NIC & 0.5% Apprenticeship Levy
£1,430,000

By using IR35 shield estimated 20 Contractors fall outside IR35 saving
£286,000

By exploring the IR35 Shield results, further remedial work can be undertaken by our consultants to amend the workers’ terms and conditions, with the aim to increase the number of IR35 pass results when re-tests are taken.

Book your online demonstration

If you are interested in seeing the IR35 shield in action, click here to book a free online demonstration.

Free IR35 reforms in the Private Sector White Paper

Click here to download our free White Paper to learn more on how to prepare for the Private Sector IR35 reforms.

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