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Posted : 29 May 2018 at 12:05:52
Category: Payroll News

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IR35 a 'fatal blow' to UK's Flexible Economy


A trade body has slammed the Government’s off-payroll working rules – known as IR35 – as discussions precede about extending this legislation change into the private sector.


Last Friday, (18th May 2018), the Government opened its consultation on proposals to extend IR35 off-payroll into the private sector. Currently it believes that only ten per cent of Personal Service Companies that should apply the legislation in the private sector do so. It also deduced that the cost of non-compliance with this legislation in the private sphere is costing the treasury £700million in the period 2017/18 – estimated to rise to £1.2billion in 2022/23.


However, Chris Bryce, CEO of IPSE, the Association of Independent Professionals and Self-Employed, has slammed the fact that HMRC are considering expanding the reforms into the private sector. He said: “For the Government to even consider introducing the ill-judged changes to IR35 in the public sector to the private sector before their full impact can be truly analysed is outrageous."


"It would be a fatal blow to the UK’s flexible economy."


“IPSE’s research – which suggests large numbers of contractors are walking away from the public sector, with a particularly bad effect on the NHS – paints a very different picture from the Government’s report. It is shameful that the Government did not publish the external research into the impacts of the public sector changes prior to announcing this consultation." Bryce also slammed the online tool, CEST, which is central to IR35 status determination. HMRC themselves previously admitted that they held no data on the accuracy of the tool.


“The Government is kidding itself if it thinks HMRC’s online tool – which it encourages people to use to determine their IR35 status – can be relied upon,” he continued. This latest condemnation of IR35 follows a court case last week in which a contractor overturned HMRC’s decision regards his tax status. The contract worker, who supplied his labour via a personal service company and through Capita, to the Department of Work and Pensions was believed by HMRC to be working inside IR35. However, contrary to the Government’s belief, a Judge found that the worker’s contract belonged outside of IR35 – primarily due to the absence of a sufficient degree of control over his working methods.


SOURCE: Recruitment Grapevine




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