A client (Recruitment company) has approached me to run payroll for contractors that are deemed to be inside IR35. I am currently thinking if it is worth the hassle
Does anyone have any recommendations on suitable payroll software. Thanks !
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IF you're going to do - and it's a big IF, make sure you've got your service level agreement very clearly worked out.
Payroll for agency workers can be much more demanding than regular employees:
- weekly pay, typically with a timesheet deadline on Monday for payment on Friday
- multiple parties - your client, worker, 'employer'. I would strongly recommend that you ensure that the agency provides you with ready to go instructions - ie they ensure that hours worked are fully authorised before data reaches you
- VAT. I assume that even inside IR35, worker earnings are in scope for VAT. But I don't know - and it's an added complication because (a) you/agency needs to ensure they get VAT invoices from relevant workers and (b) net pay isn't the same as the payment to be made.
And I'm sure there's more.
I agree with you it is more complex than I first thought - holiday pay. Employers NI, Pensions, Timesheets, expenses etc. It works differently than a normal payroll.
There isn't going to be that many contractors maybe initially two that could grow maximum 25. I will need the right software which will be expensive.
I don't really enjoy doing the payroll so may just outsource it but still monitor it on behalf of the client.
Surely it is up the contractor to run the payroll unless your client is actually subject to the off payroll rules?
Why don’t you start with looking into the application of the rules to your client (which apply to medium and large companies)?
Yes the off payroll rules is the issue. I have looked into it and seems a specialised area so will just outsource it to someone who knows this area than I do.
What have you looked into and did you actually read my reply? Have you actually looked into whether your client is caught by the rules and, if so, how did you come to that conclusion?
Isn't it the size of the engager that determines whether the off-payroll rules apply - not sanjay's client?
Have I misunderstood? I thought Sanjay’s client was the engager?
(But aren’t the contractors just running an inside IR35 payroll then and what has this to do with the off payroll rules? And why isn’t the contractor’s accountant running this?)
The Client has told my client (recruiter) that they need to run the payroll for the contractors as they are inside IR35
Payroll is hard enough when you have direct contact with the 'employee'.
Given that there is
1) 'Employee'
2) Actual Engager
3) Recruitment Company
4) Sanjay's firm
I would worry I was too far from the front line to reliably get this correct - even for a regular 'monthly salary' type thing.
So if you outsource, your name is in the frame ..the contract should be direct between your client and the outsourcer.
Also by saying you'll keep an eye on things is opening up a whole can of worms for you if things go wrong.
It is only a hassle if the client does not pay an acceptable fee for the work done!
Please behave as a sensible commercial company does.
There are a number of inexpensive but competent payroll programs offering trial periods.. Try them out!
Also, the main thing is you will have to work to a strict time table, can you do this?
Often companies insist agencies pay contractors off-payroll regardless of company sizes. They want to be sure that there will never be any comeback on them. I have contractors in that situation.
Ordinary payroll software will cope with off-payroll workers. Moneysoft does.
As with running any payroll for a client, the details and timescales are in the engagement letter and you only deal with one designated person in that company. The onus is on them to check information is correct and properly authorised before sending it.
The complications are: a) understanding off-payroll rules; b) calculating the deemed direct payment; and, c) producing the self-billing invoice.
I doubt there is any payroll software that will also do b) and c) as there isn’t a market for it.
If off-payroll is outside your area of expertise - some of your questions and comments indicate it is - then you can’t really do it, advise your client on it, or oversee others doing it.