IR35 News – Consultation is launched

The long awaited IR35 consultation for ‘off-payroll’ working in the private sector has been published by HMRC.

The sub heading says the “Consultation looks at improving the rules around ‘off-payroll’ working so contractors who work through their own company pay the right tax.”

It follows with: “the consultation will specifically look at how to increase compliance with the existing ‘off-payroll’ working rules. These rules mean that contractors such as IT and management consultants who work through their own company but are in practice employed by a third party, pay the right tax as employees.”

“Evidence suggests that the taxpayer could be missing up to £1.2bn a year by 2023 as a result of people getting the rules wrong, and incorrectly paying tax as if they were self-employed. The consultation will look at how to make these rules work better. The genuinely self-employed will not be affected.”

Financial Secretary to the Treasury, Mel Stride, said:

  • “It’s very important that we recognise the hard work of contractors across all sectors, who contribute to our growing economy.”
  • “But it’s also right that we have a fair tax system that balances efficiency and simplicity for taxpayers, while also supporting our vital public services.”
  • “That’s why we’re consulting carefully and welcome a wide range of opinions and evidence on how to tackle non-compliance.”

Worryingly, the rhetoric on the launch page repeats the same old mantra by HMRC who appear to have learnt nothing from the widespread reported chaos made in the public sector.

The level of denial is astounding with the claim of “External research on initial implementation shows that the reform has had relatively little impact on projects or vacancy filling in the public sector.”

In my opinion the audacity of HMRC to release this consultation within days of being heavily defeated on IR35 by a contractor in court is beyond belief. How can HMRC be expected or trusted to educate the private sector to assess the employment status of workers when they cannot even get it right themselves? If this goes ahead it will be a complete car crash.

The consultation will close on 10th August 2018.  This has to be in view of changes being introduced from 6th April 2019.