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Government launches “inadequate” IR35 review

IR35 review is opened and immediately shot down

The Government launched its much-anticipated review into proposed changes to the IR35 legislation and faced an immediate backlash, with one expert describing it as “inadequate.”

After having been urged to “act immediately” on the promise the Chancellor made in December to review IR35, the Government has announced that it will consult on controversial reform until mid-February. This is less than two months before the introduction of the reform, which will see contractors’ medium and large private sector clients take on the responsibility for deciding IR35 status. 

As part of the review, the Government plans to invite industry specialists to attend “a series of roundtables” to help gather evidence from affected individuals and businesses to ensure smooth implementation of the reforms.” Issues such as CEST, HMRC’s IR35 tool, will be discussed and evaluated. As will the performance of similar changes introduced in the public sector in 2017. 

Financial Secretary to the Treasury, Jesse Norman, explained his reasons for holding a review: “We recognise that concerns have been raised about the forthcoming reforms to the off-payroll working rules. The purpose of this consultation is to make sure that the implementation of these changes in April is as smooth as possible.”

Expert sceptical of whether IR35 review is genuine

However, the fact that the Government is exploring ways to make reform work, rather than considering delaying or, better still, scrapping April’s changes is a problem in itself, explained Qdos CEO, Seb Maley.

While a review is a sign of progress, it doesn’t mean the changes will be scrapped. HMRC itself has said this review is to make sure reform is implemented smoothly, suggesting the Government has every intention of rolling out needless changes irrespective of any findings.”

As a result, Mr Maley urged contractors, agencies and private sector businesses “to assume changes will be enforced and prepare immediately.”

Government blasted for review timings

Meanwhile, IPSE’s Andy Chamberlain, who described the details of the review as “disappointingly hasty and inadequate”, was particularly critical of the Government for allocating “far too little time for a full review.” He is of the opinion that the limited nature of it “would leave the freelance sector floundering.”

Mr Maley also touched on the timeframes, which give the Government little chance to manoeuvre. He said: “Given the legislation applies to payments made on or after 6th April, which typically covers work carried out in March, there is very little time for the Government to make any improvements once the review has concluded in February.”

Conservative’s support of contractors questioned again

Having been criticised for introducing public sector changes in 2017, before announcing plans to extend a version of this reform to the private sector, questions have regularly been asked by industry experts of whether the Conservative Party is supportive of independent working. 

Following the launch of the IR35 review, frustrations surfaced at the Government’s blinkered approach to reform. This was something IPSE’s Andy Chamberlain focused on: “During the election, Sajid Javid said the Conservatives were ‘on the side of the self-employed’. It must not be one of the first acts of this Government to let this commitment slide.”

Government under an “illusion”

In the IR35 review document, which you can read here, the Government claimed that “the off-payroll working rules do not affect the self-employed, as only those working like employees are in scope.” 

This was a point Qdos CEO, Seb Maley, addressed: “That HMRC is still under the illusion that IR35 reform only affects those ‘working like employees’ also shows just how out of touch the Government is with regards to the true impact of the changes.”

The fight continues 

With the countdown on to 6th April and the introduction of the changes, IPSE’s Andy Chamberlain encouraged the Government to put a halt to incoming reform while an independent review is conducted.

“The Government must urgently reconsider. It must give more time for a full review that includes an impact assessment of the changes in the public sector and the likely effects on the private sector. And for the integrity of the review, it must make sure it is independently chaired.”

By Contractor Weekly

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14 thoughts on “Government launches “inadequate” IR35 review”

  1. Geoff

    MTD “consultation” was HMRC simply publishing what they intend to do. Despite widespread criticism, including from the House of Lords Treasury Committee, they went ahead anyway.
    I expect this to be no different.

    • Paul

      I think you will be disappointed.

      The fact you still have hope saddens, surprises and, if I’m honest, delights me a little. I hope you are right, but I unfortunately know you’re not.

      But I’ll eat a hat if you are 🙂

  2. Neil

    Anyone who truly believed that the Conservative government would conduct a serious, meaningful review of the pending reforms is a fantasist. They’ve already had plenty of time for that but have chosen to pay lip service instead. HMRC said last year that blanket assessments would be contrary to the proposed reforms. But they’ve remained silent as Lloyds, Barclays, HSBC and others have told ALL of their contractors that in future it’s PAYE or nothing. As long as HMRC can say they’ve increased their tax take, that’s all that matters. Fairness goes out of the window.

    • Paul

      I wish I had read your comment before posting mine! 100% agreement.

      I do not, however, blame the likes of Lloyds etc. There will be some backroom strong arming going on. They are being used as pawns by HMRC to help the implementation of their IR35 policies. If we were in the same position we’d probably do the same.

      The only thing they are really guilty of is being weak. But then they are banks. Like the Government we know what they are like so that shouldn’t, really, be any surprise to any of us.

      • Neil

        Paul, I certainly don’t blame the banks, or any other businesses, for the way they’re approaching the reforms. HMRC unilaterally decide that hiring companies must take on the responsibility for assessment of IR35 status. Why on earth should they? There’s absolutely no benefit to the hiring companies, only the risk that HMRC will disagree with an assessment and come after them for their “error”. I don’t blame any company for taking the path of least resistance and effectively applying blanket assessments, it’s the safest option for them. Ultimately, the reforms are badly thought out and hamfistedly applied – unintended consequences will abound…

    • IR35 Survivor

      The banks have not said that they will use a blanket assessment, they have said that they will NO LONGER work with PSC.

      HMRC have made it clear it will come after them as it cannot win against the PSC.

      Banks are risk averse so they shut the PSC’s out completely.

      A PAYE employee will never contribute more than a contractor to HMRC.

      HMRC will receive 66% of what it previously recurved from myself now that I have gone permanent.

      HMRC is incapable of acknowledging that it’s maths don’t add up.

  3. Paul

    What really makes me shake my head in disbelief is the incredulation that the Goverment are doing this half-heartedly.

    Did any of you, genuinely, believe the Government were going to do a full and thorough review? Did you believe that there was a chance that they would change IR35 for the benefit to the contracting industry?

    If so, your naivety saddens me. It was never on the cards. It was to gain votes. Nothing more.

    IR35 is here to stay. Successive government have made that clear. The contracting industry is an easy target for HMRC. They gain headlines that they are ‘tackling tax inequality’ (or whatever clickbait headline there is today), the Government get those tickboxes checked, the public think they are doing their job and all of it is so that they really don’t have to tackle the real issues with the tax system. Large companies get away with paying little to no tax (we all know who they are – the headlines appear and disappear very quickly).

    Tackling large companies and ensuring they pay their fair share can onyl be done thorugh negotiation. YOu won’t see too many HMRC takes Facebook to court headlines because Facebook have rooms full of accountants and lawyers who will fight and delay to death. It’s not worth it. And those same companies back the Governments in power with money so there is no appetite to change legislation to plug the holes to make HMRC’s job easier.

    But contractors? We have an insurance policy (if we have planned ahead). One accountant. One lawyer. And little money to fight. We are easy targets We allow HMRC to tick those boxes.

    I apologise for the rant. A little. While I appreciate these sort of articles and the work done around them this is not news and should not be anything a contractor does not already know.

  4. Guy

    I always said the review woud be…

    “We were right. No change needed”

  5. Phil Wade

    A pointless and costly bit of legislation to hound the small hard working contractors. Redirect the efforts of HMRC to cut the big fish down to size – usual high profiles suspects: Amazon, Google, Microsoft. rip-off oil companies. (1) it would raise shed loads more money, (2) would get universal popular support.

  6. E

    Seb may be vocal about this but his lobbying ability is next to nothing. All the contractors are going to cease needing services from Qdos and his company is doomed.

  7. E

    Seb may be vocal about this but his lobbying ability is next to nothing. All the contractors are going to cease needing services from Qdos and his company is doomed.

  8. Tony

    What more do you expect of the Conservative party who couldn’t care less if you were homeless and sleeping rough on the streets. They pretend to be for the working classes but are very, very far from it. A party infested with rats with sewer mentality. What does “working as an employee” actually mean? Every working person on earth works as an employee. A barrister, a judge, a builder a plumber an electrician, the tax man etc. What is is the difference of a plumber working for a home builder and a plumber who contracts with the home builder? The contractor gets no pension, no sick pay, no holiday pay, no personal development, no expense reimbursement, no social events, they can be hired and fired at will of the client. All costs and risks to livelihood are on the contractor, but HMRC can say they are acting as an employee!

  9. Glennn

    It is blatantly obvious they have no intention of halting or changing this rule. Actions speak louder than words and reveal the truth.

    HMRC is well aware of what they are doing, they are under no illusions, nor do they care.

    The only solution is to abandon the UK market and pay taxes elsewhere. This is inevitable, the result being higher taxes to those who remain to make up the shortcomings. I
    In the end, it will have accomplished nothing and reduced rather than increased the tax grab.

  10. Natasha

    Well it really doesn’t matter what they agree too as most of use are forced into the IR35 Legislation even if the contracts should site outside as many companies have taken a “blanket” approach to this full stop.

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