How IR35 impacts the way you hire contractors
Hiring contractors has always given businesses agility. You can bring in specialist skills quickly, scale up a project team at pace or cover gaps without committing to permanent headcount. But IR35 has changed the landscape of contractor recruitment in the UK, and it affects the way organisations must now approach hiring. At Vermelo RPO, we help businesses cut through the complexity with a smarter way to manage contractor hiring through our Managed Service Provider (MSP) solution.
Understanding IR35
IR35 is legislation designed to ensure that individuals who work like employees but bill through their own limited company or personal service company (PSC) pay broadly the same tax and National Insurance as employees. The responsibility for assessing whether a contractor falls inside or outside IR35 used to sit with the contractor. Since April 2021 in the private sector, that responsibility has shifted to medium and large organisations.
This means if you hire contractors directly, you are now accountable for determining their IR35 status, ensuring the assessment is correct and applying the correct tax treatment. Get it wrong, and your business could be liable for significant backdated tax and penalties.
The risks of getting IR35 wrong
IR35 has created uncertainty for many organisations. Some worry about attracting HMRC scrutiny. Others are concerned about losing top contractor talent who prefer outside IR35 roles. The risk is real:
Financial penalties if HMRC finds misclassification
Extra administration burden on hiring managers
Loss of contractor goodwill if assessments are unclear or delayed
Project disruption if roles are incorrectly scoped or compliance is not watertight
For businesses that rely on flexible talent, these risks can stall projects and make it harder to stay competitive.
Why businesses need a smarter approach
Traditional in-house contractor hiring often struggles to keep up with the compliance requirements of IR35. Individual hiring managers are rarely compliance experts, yet they are asked to make complex determinations about tax status. Without standardised processes, documentation and clear communication, it becomes all too easy for mistakes to creep in.
That is where a structured MSP model makes the difference. Vermelo RPO’s MSP solution gives you a compliant framework for contractor hiring that removes the guesswork from IR35.
How Vermelo’s MSP solution helps
We design our MSP approach to give you control, visibility and compliance from the outset. Instead of leaving contractor hiring as an ad hoc process, we bring consistency and expertise.
Standardised processes: Every contractor engagement is managed within a robust framework. From initial role definition through to onboarding, IR35 checks are embedded as part of the process, not an afterthought.
Pre-employment checks: We ensure every contractor is vetted properly, giving you confidence in both compliance and capability.
Clear accountability: Our specialists manage IR35 status determinations, documentation and reporting. This protects your business and reassures contractors.
Access to talent: With our extensive contractor recruitment network across industries and geographies, you can fill roles quickly and access scarce skill sets without compliance concerns holding you back.
Actionable insight: We provide management information that gives you visibility of contractor spend, usage and compliance. This allows you to make strategic workforce decisions, not just tactical hires.
In short, we make contractor hiring faster, easier and safer, so you can focus on delivery rather than paperwork.
The wider benefits of an MSP model
IR35 compliance may be the trigger for change, but the benefits of adopting an MSP go beyond avoiding risk. Businesses that switch from fragmented contractor hiring to an MSP model often see:
Faster time to hire through streamlined processes and technology
Better candidate quality from proactive sourcing
Reduced cost from consolidated supply chains and clearer workforce planning
Improved contractor experience with transparent communication on IR35 assessments
Strategic workforce planning supported by robust management information
At Vermelo, we call this Recruitment as a Service (RaaS). It is not just about filling vacancies; it is about delivering a complete contractor hiring solution that scales with your business.
Why Choose Vermelo RPO
We understand the pressures hiring managers face. The need to deliver projects at speed often collides with the complexity of compliance. Our MSP approach gives you the best of both worlds. You get rapid access to the contractors you need, backed by the assurance that every engagement is compliant with IR35 and supported by structured processes.
Whether you are filling a gap, sourcing niche skills or building a project team, Vermelo RPO provides the expertise, technology and contractor recruitment network to deliver. We bring structure to fragmented contractor hiring, transforming it into a strategic advantage.
Ready to take control of contractor hiring?
Get in touch with Vermelo RPO today to see how our MSP and RaaS solutions can give you the confidence, compliance and contractor talent your business needs.
Book a 15‑minute discovery call or contact Santa Benga - santa.benga@VermeloRPO.com | 07304 094171