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IR35 HMRC Exemption

Dear Contractor Weekly, while I completely feel that IR35 is a counterproductive policy to help the Conservative Government further turn hard working members of the public into cash cows, I believe that any policy should be applicable to every single sector of the United Kingdom. However, I can confidently confirm that this is not the case.

I have been working for HMRC as a contractor for a number of years and when myself and other HMRC Contractors learned that this policy would greatly impact our financial responsibilities such as our mortgages, rent, children’s school fees and other bills, we gradually tendered our resignations just prior to the policy being made effective by law.

When HMRC realised that practically all of its contractors had left and that they’d need to rehire, they contacted all of its former contractors to return to work with the assurance that they would be exempt from IR35 policy. This is after they unsuccessfully advertised to replace those that had left.

We started returning to our previous positions and felt that there was indeed hope for all other contractors across the UK to avoid the negative impact of IR35.

However, we later learned that this exemption is applicable exclusively to HMRC alone in the UK.

Because of this I have decided to bring this information to your attention anonymously as it is extremely unfair and an act of betrayal on the part of HMRC.

Please get the information out there and demand that your local MP fight for equal suffering and let’s find a way to get this trigger happy government, who are hell bent of firing policy after policy, to correct their self-created economic and political hardship where we, the people, remain the victim.

Sadly, I learned over the weekend that HSBC have put policy in place to sack all its contractors come September 2019, with other banks also intending to follow suit. How is this conscionable or fair?

Should you be wondering whether this claim is accurate, I assure you that it is indeed a fact and it is my hope that once you decide to publish this article, other HMRC Contractors would also come forward anonymously so that the government and HMRC would be exposed for their malicious policy and duplicity to exempt itself from their own policy.

An HMRC spokesperson said:

“There is no exemption from the off-payroll working rules for contractors working in HMRC. The rules apply equally to HMRC, as they do any other public authority.”

This is written by an anonymous contractor and represent the views of the author and therefor do not represent the views of the publicist.

If you’re a contractor looking to share your story, please contact Contractor Weekly today.

By Anonymous Contractor

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34 thoughts on “IR35 HMRC Exemption”

  1. Matt

    How come I don’t trust the HMRC spokesperson. They are above the law and at some point they will bring the country down and it will be rioting and chaos.

    • Joe Schmoe

      There’s no exemption from the rules, but that doesn’t mean they haven’t found a way to work around their own rules to ensure they can hire contractors outside of IR35. Weasel words. Right to substitution and then actually substituting is the best way to ensure they leave you alone, if you can persuade your client to take the perceived risk that hmrc might come along and try to scare them into finding you inside of IR35

  2. Mike

    I’d take this with a pinch of salt without more evidence. There are too many people out there who would so like this to be true.

    And you can’t sack a contractor – you can only sack an employee.

    • Neil

      “can’t sack a contractor” – exactly. This is employee speak, which makes me think even the original poster thinks they are one !

      • Bob

        If a company terminate every single contractor on a set date, I’d think it wouldn’t be unusual contractors to think in terms of being “sacked”.

        This may or may not be true, however don’t think you can dismiss it due to the use of the word “sacked”.

  3. Another Mike

    IR35 was introduced by a Labour government in 2000.

    • Mike#3

      I believe the issue is that the rules are changing around IR35 in order to try and force contractors out of it. This is being done by the Conservative gov.

  4. Ying Tong

    “There is no exemption from the off-payroll working rules for contractors working in HMRC. The rules apply equally to HMRC, as they do any other public authority.”

    The bald statement from HMRC acknowledges only that the rules apply. It does not deny that HMRC may have interpreted contract terms and working practices to ensure that the the assignments fall outside the scope of IR35. They need hardly live in fear of an investigation after all.

    The fact that they have gone to the trouble of spinning an answer to a different question suggests to me there may be something in this.

  5. HMRC Hunter

    IR35 needs to be reviewed as it’s killing the flexible working which this country needs to maintain a competetive work force especially with Brexit.

    Going forward more people will be only able to get contract work as employees don’t want the hassle of perm staff and their legal rights. This change can be seen already with the number of zero hour contracts being used more and more.

    As a contract myself it’s unfair to see that now you are being treated as a perm by HMRC. There is little protection for contractors and little benefit now compared to a fulltime permanent job, HMRC and the Gov will continue to milk the middle class workers while they enjoy the cake.

  6. HMRCHunter

    IR35 needs to be reviewed as it’s killing the flexible working which this country needs to maintain a competetive work force especially with Brexit.

    Going forward more people will be only able to get contract work as employees don’t want the hassle of perm staff and their legal rights. This change can be seen already with the number of zero hour contracts being used more and more.

    As a contract myself it’s unfair to see that now you are being treated as a perm by HMRC. There is little protection for contractors and little benefit now compared to a fulltime permanent job, HMRC and the Gov will continue to milk the middle class workers while they enjoy the cake.

  7. HMRCHunter

    IR35 needs to be reviewed as it’s destroying the flexible working which this country needs to maintain a competetive work force especially with Brexit.

    Going forward more people will be only able to get contract work as employees don’t want the hassle of perm staff and their legal rights. This change can be seen already with the number of zero hour contracts being used more and more.

    As a contract myself it’s unfair to see that now you are being treated as a perm by HMRC. There is little protection for contractors and little benefit now compared to a fulltime permanent job, HMRC and the Gov will continue to milk the middle class workers while they enjoy the cake.

  8. Anonymous

    IR35 needs to be reviewed as it’s destroying the flexible working which this country needs to maintain a competetive work force especially with Brexit.

    Going forward more people will be only able to get contract work as employees don’t want the hassle of perm staff and their legal rights. This change can be seen already with the number of zero hour contracts being used more and more.

    As a contract myself it’s unfair to see that now you are being treated as a perm by HMRC. There is little protection for contractors and little benefit now compared to a fulltime permanent job, HMRC and the Gov will continue to milk the middle class workers while they enjoy the cake.

  9. No Way

    But it’s the intermediary who carries the risk, right? So what are we all worried about?!?

    • Mike#3

      The intermediary will then have to terminate contracts if they feel there is any risk whatsoever. People, in this instance, are worried that the rule does not apply to ALL.

  10. A Contractor

    Seems to me with HMRC that its one rule for one industry and one for the other. In the case of Construction Contract workers, a scheme is now run by HMRC that puts them on a flat 20% tax deducted at source irrespective of the day rate. So how does that seem fair with us contractors with Ltd’s paying Corp Tax, NI and Personal tax on dividends.

    • Rk

      To the person complaining about the construction industry scheme – please get your facts right before you shoot from the hip. The CIS is just a means of the taxman collecting taxes as payments are made, these are then reconciled against the individuals personal tax return at the end of the year. They are sole traders like everyone else and subject to the rules the same as everyone else, they just don’t have the choice of keeping their tax money in a high interest earning investment scheme until it is due to be paid. Instead the taxman very kindly takes it directly from the employer and then decides how much the contractor owes later. Still want to take part in the CIS scheme?

  11. Bob

    I’m contracting in a FTSE 100 company, and yesterday they told us that they are getting rid of all contractors in a few months due to 2020 ir35 changes. They just don’t want to risk getting fined. I also heard about HSBC.

    I suspect this motive will spread over to other big companies and thanks to ir35 changes, very good IT contracting market will die and UK will lose competitive advantage to attract talent.

  12. Terry

    I am sure this story is accurate. You only need to look at the ads recruiters show for HMRC contract vacancies. Some show ‘outside IR35’ and others do not. Now that HMRC say it does not apply what will they do to HMRC contractors now working outside IR35 – change current arrangements and tax them under PAYE or force them to work for an umbrella company ?

  13. John

    Also, I have a contractor friend who is working for Department for Work and Pensions. Same thing happened there. When they realised they are gonna lose all contractors, they said all contracts outside ir35 here, come back, don’t worry.

  14. Bob

    Also, I have a friend who is working for Department for Work and Pensions. Same thing happened there. When they realised they are gonna lose all contractors, they said all contracts outside ir35 here, come back, don’t worry.

  15. Steve G

    “Sadly, I learned over the weekend that HSBC have put policy in place to sack all its contractors come September 2019, with other banks also intending to follow suit. How is this conscionable or fair?“

    Why a paragraph about HSBC in the middle of an article about HMRC? Sounds like the author is a troll and has got his works of fiction mixed up.

    No more fairy stories please QDos. If you can’t check the veracity of stories then don’t print them.

  16. Fred Bloggs

    HMRC is telling lies. Someone I work with has a wife who contracts for HMRC and has been issued a letter that says she is IR35 exempt. They are lying hypocrites.

  17. AB

    Bit confused here, earlier today when I read this, the author wrote HSBC instead of HMRC in the below statement, but the following comment where it says “other banks will follow suit”, doesn’t quite make sense since they corrected this.

    “Sadly, I learned over the weekend that HMRC have put policy in place to sack all its contractors come September 2019, with other banks also intending to follow suit. How is this conscionable or fair?”

    • Contractor Weekly

      Sorry, it should have read ‘HSBC’.

      • Steve Greenham

        Randomly changing the text from HSBC to HMRC and back again doesn’t add any credibility. Now, not only are you not checking facts of the story, you aren’t even checking it is consistent with the rest of the paragraph!

        • Prashant

          I also know someone working for HMRC as a contractor outside of IR35.

          The news about HSBC is correct They are indeed removing contractors.

  18. KP

    Not sure why the private sector clients/banks can’t simply replicate the approach taken by HMRC themselves i.e. make sure contacts are compliant and update working practices for contractors to stand up to IR35 scrutiny.
    I would have thought this was a good thing if it wasn’t for HSBC apparently seeking to cut all contractors from Sept 19′. However, this doesn’t seem to be solely down to IR35. I’ve seen many clients making serious efforts to convert contractors to perm and downsize their contractor headcount and dependencies. IR35 may just be the catalyst for this.

  19. Max

    Well, this is simply not true. Lots of noise for nothing. I have a contract with department for education and I am, just like all the contractors next to me, outside of IR35.

  20. Terry

    Why doesn’t somebody write to the HMRC press office and raise a Freedom of Information Request “HOW MANY CONTRACTORS CURRENTLY WORKING DIRECTLY TO HMRC ARE WITHIN IR35 AND HOW MANY ARE EXEMPT” HMRC should not be able to lie their way out of this – come on Daily Mail do your stuff !

  21. Anonymous Contractor

    I know a couple of contractors who are currently contracting for the Department for Work and Pensions & they recently had a review of their contracts for IR35 status.

    These contractors were asked a number of loaded questions, which were geared towards circum navigating IR35, it isn’t just the HMRC who are dodging IR35….

  22. Doug

    Being a government body HMRC are open to the freedom of information act.
    So the question to them (if anyone can be bothered) is
    ‘How many of your contractors fall outside IR35? ‘

  23. Fred

    There’s a big difference between being “exempt” from IR35 and being deemed “outside of IR35”. The legislation in the pubic sector now requires the contracting body to make the determination, hence organisations writing to contractors with the outcome of that. Obviously some “departments” are less likely than other companies to actually be the focus of investigation though …

  24. Chris

    As per my previous reply: Congrats HMRC, you win… it doesn’t matter how many of these prosecutions fail, the fact that they’re happening at all and the fact that the intermediary is now going to carry the risk means the big companies are scared of getting dragged into these witch-hunts to the extent that a lot of them have now stared binning contractors all over the place. I’ve got sick of the constant threat, so I’m packing in my small limited company and going to work for one of the big boys… and I can’t help but add up the losses all-around: I’ll be earning so much less that I’ll paying around £45k-£50k per year less tax (smaller income PAYE+NI vs contracting size income with some PAYE + VAT + corporation tax + dividend tax)… so we’re just saving as much as we can now and trying not to get into debt because we’ll have a lot less disposable income – less luxury goods (VAT/excise receipts for HMRC). The big company I’ll be working for may be paying some NI to offset this (<£10k)… but I guarantee you that they will be siphoning their profits off via one of the non-EU loopholes that the big companies are allowed to use (like Apple, Starbucks, Google, etc)… the really sad thing is that somewhere in HMRC this is being chalked up as a "win" for PAYE taxation over contracting, despite less money remaining in the UK and less HMRC receipts…. well done guys, I really hope you're proud!

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