Compliant Contractor Utilisation In Businesses
Utilising external contractors is an excellent way for businesses to access specific skill sets or additional capacity at pace. However, without careful management and oversight, contractor utilisation can pose significant risks to a business given the legislations which need to be adhered to, including the IR35 off-payroll working rules and The Criminal Finances Act.
At The Curve Group, we offer audits of contractor utilisation processes to identify any opportunities for efficiencies or risks to your business. Based on the findings, we make recommendations on how your business can improve processes to comply with all applicable legislation and save money, whilst still accessing the talent that you need.
We were recently engaged to undertake a contractor utilisation audit by a wealth management provider. Prior to the IR35 off-payroll working rules coming into force in the private sector in April 2021, they had reviewed their processes to ensure they were ready to comply with change in legislation. The aim of the audit was twofold – firstly, to check whether the updated contractor utilisation processes were still fit for purpose and secondly, to see whether they were being fully adhered to across the business.
Key Findings and Recommendations
Post-audit completion, we presented key findings back to the senior leadership team, which included:
- That processes were not being consistently utilised when it came to engaging contractors, therefore there were gaps in checks / vetting and paperwork. Procurement were not always being involved in sign off on contractors as per business policy
- The ongoing working practices of contractors were not being reviewed to ensure that the initial IR35 status determinations remained correct – in addition, IR35 status determinations were not being recorded on the HR system
- Actual time worked vs invoices from Contractors was not being audited or checked (they were not required to submit timesheets)
Alongside these findings, we submitted recommendations on how to improve processes to ensure the business remained compliant. Recommendations included:
- Building in a check point for procurement to review all contractor terms and vetting prior to engagement to ensure processes are followed
- Making it standard practice to regularly review contractor working practices once in situ, to verify that IR35 status determinations reflect actual working practices
- Creating a vetted, Preferred Supplier List of Contractor agencies through which contractors could be sourced, to ensure all due diligence and checks are better managed
- Implementing a time sheeting process to better control sign-off of hours/days worked
As a business we wanted to make sure that our contractor utilisation complied with the IR35 rules post rollout in the private sector. The Curve Group promptly audited all steps within our contractor engagement process, and reviewed the audit trails, terms and working practices for our current contractor population. They provided clear guidance on improvements we could make in order to ensure we remained compliant and reduced the risks of fines to the business.
Get in touch if you’d like to find out more about our Contractor Audits.
