IR35 Compliance Lessons: £17.6m Wake-Up Call for Contingent Workforce Management
Natural Resources Wales (NRW) has recently agreed to pay around £14.6 million to HMRC over historic contractor misclassifications (plus nearly £3 million in suspended penalties).
Their response? A blanket ban on contractors operating through limited companies (PSCs). In other words, no more flexibility, and no more access to specialist skills through that route.
This isn’t just a tax story. It’s a workforce risk story, a powerful reminder that how you engage and manage contingent talent can have serious financial and operational consequences.
How Managed Service Provision (MSP) Reduces IR35 Risk
If your organisation relies on contingent talent, a Managed Service Provision (MSP) partner can act as your built-in risk-mitigation layer.
Here’s how:
Governance & compliance: A good, well run MSP provides frameworks, assessments and audit trails that help you stay IR35 compliant
Access + agility: With the right controls, you don’t have to choose between flexibility and compliance and can avoid blanket bans entirely
Audit-ready protection: When IR35 liability sits with the engager, an MSP provides structure and oversight to keep you on the right side of HMRC
Talent strategy enabler: Instead of moving away from contractor talent, an MSP lets you keep access to critical skills, safely and strategically
For HR and Procurement Leaders - Do you know the risks of IR35 non-compliance?
Ask yourself:
Are contractor roles individually assessed and properly documented?
Is your MSP (or internal process) updated with the latest IR35 case law and guidance?
If you banned PSCs tomorrow, what impact would it have on delivery and performance?
Building a Strategic Workforce Compliance Culture
Managing contingent talent isn’t just about meeting tax rules, it’s about protecting business continuity and capability.
Creating a compliance-first culture, supported by a trusted MSP partner, allows organisations to adapt quickly while staying audit-ready and risk-aware.
At Vermelo, we believe a well-managed flexible workforce isn’t just a compliance measure; it’s a competitive advantage. The real cost of non-compliance isn’t just tax. It’s project delays, lost expertiseand reputational damage. A robust MSP model gives you the governance you need, with the agility you want.
Not sure where you stand? Contact us to get a Free IR35 Contractor Workforce Audit to uncover potential risks and strengthen your compliance approach or schedule a call with Anthony Butler.