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Conservatives Could Win Support with IR35

Could an IR35 rethink in 2018 win The Conservatives contractors’ support?

With 2 million freelancers and contractors in the UK, the vote of the independent workforce has never been more influential than it is now. And as pressure mounts on the Government to finally show its commitment to the contracting community, the Conservative Party has an opportunity in 2018 to underline its support of the independent workforce by repositioning itself on IR35.

The Government must rethink its approach to IR35 in the next twelve months if it is to salvage its broken relationship with freelancers and contractors, who together contributed more than £119bn to the economy in 2016.

Qdos Contractor research carried out soon after last year’s General Election proved conclusive. 97% of contractors surveyed do not believe the Government has their best interests at heart, while 95% are adamant that reform to IR35 in the public sector is reducing the benefits of self-employment. 63% also called on The Conservatives to address the clear imbalance of the current tax system following their marginal majority.

But as we head into 2018 – which marks more than 6 months since The Conservative’s new term in office – contractors are bound to still feel disappointment by the Government’s recent moves around IR35.

And the most memorable developments have unfortunately been ones which contractors would no doubt prefer to forget. The Government has often hinted at the possibility of further IR35 reform without actually announcing it, while the implementation of last year’s public sector IR35 changes have been haphazard and unstructured.

Given that IR35 is a legislation which in time – and following expected private sector reform – could impact all 2 million of the UK’s independent workers, action must be taken.

The sheer size and growing influence of the independent workforce – which accounts for nearly half of the UK’s 4.8m self-employed population – suggests that it might well hold the key to deciding the political party that resides in Number 10 for many years to come.

With that in mind, in 2018 The Conservatives must make moves to build a tax system which genuinely works for freelancers and contractors, and not against them. And as many of us know, IR35 is an issue that sits at the very center of this entire debate.

Late last year Qdos published a number of IR35 suggestions for the Government to consider in 2018. In addition to this roadmap for the year ahead – which includes advice on approaching the incoming IR35 consultation with an open mind, a review of CEST and the ruling out of further reform entirely – The Conservatives have several other opportunities they must seize if they hope to win back any shred of support.

Should the Government have already made its mind up on announcing private sector reform this year, the least it can do is seriously consider the way in which it goes about policing IR35 changes.

Clarity is needed around the IR35 investigation process and how HMRC intends to carry out compliance checks. Currently, we remain in the dark about how formal enquiries will be completed – barring the initial approach to the end engager. What happens next? For the Government to have any shred of winning back contractors’ trust, it needs to be transparent about the process.

Just one IR35 enquiry alone can take anything up to 18 months, from start to finish. How does HMRC expect to carry out investigations en masse, for say, fifty or even one hundred contractors? What would be the anticipated timeline for each case? Does HMRC realistically have the capacity to handle such a thing?

These are the kind of questions that contractors, along with public sector bodies and recruitment agencies need answering in 2018. And should IR35 reform be extended into the private sector, the need for these kind of details becomes increasingly important, given the sheer size of the task that might lie ahead.

While it’s unlikely that HMRC will publish its entire strategy, the Government must keep a watchful eye of its tax department, and apply the same kind of pressure HMRC will insist upon as it carries out IR35 compliance checks on public sector engagers.

HMRC began making informal enquiries in the public sector late last year, and while we’re yet to hear of any formal investigations, it must use case law as the foundation of any argument. The party carrying out assessments in the public sector might have changed, but IR35 itself hasn’t.

This year, we also urge the Government to focus on helping The NHS cope with last year’s reform. Despite the reversal of an initial blanket IR35 determination following public sector changes, we understand that numbers of locum and contract workers are yet to have their working arrangement reviewed individually.

The NHS relies on contract workers, from IT experts through to locum doctors and nurses. The Government must support it and help them with the resource needed to carry out case-by-case IR35 decisions. This would motivate contractors to continue working on projects without the fear of wrongly being placed inside IR35.

Ultimately, the confirmation of private sector reform in 2018 would jeopardise the Government’s already unenviable relationship with contractors further. Regardless of this, and in the meantime, The Conservatives must look to improve its immediate IR35 strategy because it is clearly losing them the support of UK contractors.

By Contractor Weekly


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6 thoughts on “Conservatives Could Win Support with IR35”

  1. Geoff Hirst

    Would anyone actually trust anything they said in the first place? After all, did David Cameron not say that IR35 would be abolished ( if they were to be elected? Instead they fortified it and gave their corporate donators big breaks behind closed doors.

    • FormNOtWorking

      The problem is that they believe contractors voting intentions will not change due to IR35.

      Most are Conservative voters and will stay that way.

      I feel that’s complacent – as they were at the last election. And it’s set to get worse – I am considering not voting Conservative for the first time and I’m sure many others are too.

      If Labour were to promise action on IR35… welcome Prime Minister Corbyn.

      The problem with the political race to occupy “the middle ground” is that too many people have no party that represents them any more. Why would I vote Conservative anyway? They have not even managed to stop the annual overspend (deficit) let alone the total debt, what sort of Conservative government is that???

    • Mo

      I have been left with only £500. To live on since May 2017. Every penny l have earnt has gone on IR35.
      My MP said l should be glad the Government were clamping down on contractors.
      So working full time and willing to travel away each week to ensure l do not have to live off the state has left me pennyless.
      If l was rich or wanted to live of the State l would be given pleanty of support.

  2. Si Kaiser

    I too do not trust anything this government says. A lifelong Conservative voter, I stopped voting for them after the Brexit disaster. I decided to retire early after deciding I did not want to live under the IR35 threat. So I have gone from paying a LOT of taxes (VAT, PAYE, employer/employee NICS, Corporation tax) to legally paying very little indeed. They have killed the golden goose.

  3. Freddy Chapman

    I am another lost Tory voter – I will never bote for them again and in most cases am likely to vote for either LibDem or Labour, because the Conservatives have attacked contractors more than even Gordon Brown. After nearly 30 years a contractor I can’t wait to retire and become a consumer of the taxes I have paid instead.

  4. The Q

    IR35 favours Big Business (TM) .
    WTF would the Tories do anything (disguised employee =
    disguised employer etc) that threatens the relationship
    with their backers and future employers ??

    At least True Labour used proper “class warfare” on us
    (we are tax cheats – the poor nurses etc) to deflect from
    the above.

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