The government will not consider changes to legislation as part of its review into new IR35 tax rules, it has been claimed.
According to the Recruitment & Employment Confederation, HMRC has clarified that the review, launched on Tuesday, would be limited to how the off-payroll working rules are implemented in the private sector and would not seek to change the legislation itself.
“It is disappointing that the review won’t be looking into the legislation itself, as we had hoped, and will limit engagement from outside of London [where the review’s six round table discussions will take place],” said Tom Hadley, director of policy and campaigns at the REC.
“This makes delaying implementation, and the need to regulate umbrella bodies, even more urgent. Businesses may have just weeks to make sweeping reforms to their payroll at what is already an extraordinarily difficult time as Brexit uncertainty and skills shortages take their toll on employer confidence. Getting IR35 right and learning from the lessons of the past is critical.”
Final legislation will not be revealed until the Budget on 11 March. Susan Ball, partner at audit, tax and consulting firm RSM, reminded employers of the problems that finalising the legislation so close to the implementation date posed when the IR35 changes were introduced to the public sector.
“When the existing rules were first introduced in the public sector in April 2017, the final legislation was only made available immediately prior to introduction. This caused implementation headaches for public sector bodies and contractors, and there’s a danger of history repeating itself here,” she said.
“It is still possible that some of the more onerous obligations of the new rules, such as the transfer of debt provisions, may be watered down ahead of the final legislation being issued, but those holding out for wholesale change are likely to be disappointed.”
Nicola Hayman, legal manager at contractor insurance provider Kingsbridge, urged organisations and contractors to prepare now as there “simply isn’t time” to wait for the outcome of the review and for final legislation.
Hayman also sought to alleviate employers’ concerns about using contractors after the changes come in on 6 April. “Contractors represent a vibrant and increasingly important part of the UK economy, and this point further emphasises the fact that there is no reason why companies should be concerned about continuing to engage with this talent pool after April,” she said.
“Even when using HMRC’s own calculations, the vast majority of PSC [personal service company] contractors are genuinely self-employed – and recruiters should communicate this fact to any clients who may be spooked by the recent flurry of blanket bans so that they don’t consider implementing their own veto on contractors.
“In our experience, good recruiters are happy to place genuine contractors outside of IR35, and will work with clients to determine the status of these individuals, helping the client to overcome reasonable care requirements.”
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HMRC has been contacted for comment.
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12 comments
So… Umm… What’s the point?
But the statement that ‘In our experience, good recruiters are happy to place genuine contractors outside of IR35’ is totally untrue. I contracted to FCA to end March 2017, they just implemented a blanket ban on IR35. The whold idea mooted at the time was that lessons learned in the Public Sector .. Clearly not true. All of the big banks HSBC/BARC/LBG/RBSG have stopped off payroll contracts. I am working for a telco on a government project same story- extend as a fixed term contract or leave. The office is half empty ! I have a colleague who contracted to GLAXO , hounded out. HMRC have taken an aggressive and spiteful approach labelling 150,000 contractors as tax dodgers. I live Cardiff, when this legislation comes into law there is no benefit to me to be freelance. I estimate that I will be at least £4000 a month worse off. Yet I get no holiday pay, sick pay nor do I get paid between contracts which can be 3 months in a year (during which time I am looking for new contracts). Given the risk reward I should absolutely not pay tax in the same way as an employee that takes no risks. All of my contracts , 13 in ten years, are delivery based. 2.4 of those years I have worked in France, Luxembourg, Saudi. I will merely take a permanent role or work outside UK. The nett impact is that services companies will pick up work packages and then hire at the lowest rate, in my experience that means TATA Consulting et al, body shopping in consultant from India. Nett result ZERO tax to HMRC. The impact in public sector 2 years down the line is that the day rate has moved from £550 to £650 a day , HMRC take more tax from the consultant but Pubic sector, funded by HMRC revenue pays more, robbing Peter to pay Paul.
Good
It’s going to be one bad year this year and who will we be able to hold to account,hmrc staff
This is going to be just like going back in time and then we’re will it leave us, nobody is going to work for 30/35% money per year and with the same outlays, just what world do these people live in
The whole legislation is not good but not too bad for London based contractors .. however if you live in a deprived part of the Country Cornwall ,North east or north west Your scuppered . again badly thought out and ok for London .. nowhere else
pretty much typifies legislation in this country .
It should be if you live further than 100 miles from yu place of work you can claim your expenses .Both travel and subsistence
The current legislation has many holes. It has failed create a clear set of precedents in court in its discriminatory phased roll out. Perhaps it’s a good thing it goes in half baked.
I’m out – not worth the hassle and loss of earnings (with no employee benefits!!!). The flexible workforce will be dead and buried. It will come back and bite them
Many HGV drivers will now come under IR35 tax. The government has now helped the transport companies get drivers on less hourly/daily rates in an industry where salaries are already low. IR35 tax will mean a HGV driver will now earn about 30 to 40% less meaning government and companies are quids in but the professional drivers are the losers yet again.
I contracted for 20yrs, so unfair, I see myself as a real contractor 3 contract a year some times and no more than 2 years in one place even if asked to renewal, some times 3 months out of work, and HMRC now forcing company’s to go inside IR35 on blanket it across the company’s
I work on a contest, where I work 3 days from home on projects and the company gone ir35 blanket ban, so un fair
Yes is a rip off . and will not fill the coffers of incompetence . if they really need more money stop giving it away in overseas aid or daddy’s bank in panama
I worked abroad for 4 years in a senior IT role. Came back to UK and tried to get job but no interviews. Removed 10 years from CV and started to get interviews (not saying anyone was discriminating bu you have to wonder). Had a number of interviews but always seemed to fall at the last hurdle. Didn’t want to become one of the unemployed statistics so setup my own consultancy. Had my first contract interview, was offered a contract and have subsequently been offered two more. I spend 1.5 hours commuting each way to work. Now because of IR35 I am considering packing it all in or will just go and work abroad again where they value skill and experience. Either way there would be NO tax for UK. I suspect I am not the only person who will do this.
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