Conservative IR35

Spring Statement – Delay in Consultation?

It was no surprise that no announcement would be made in Philip Hammond’s Spring Statement on 13th March regarding further IR35 reform. However, it was widely hoped that the Spring Statement would bring with it the publication of the long-awaited consultation and research promised in the latest Autumn Budget.

Whilst there was no mention in Hammond’s speech, the Hansard report which was published shortly after the Spring Statement had been delivered, stated that a consultation document on off-payroll working in the private sector will be published:

“In the coming months the Government will publish:

Off-payroll working—a consultation on how to tackle non-compliance in the private sector, drawing on the experience of the public-sector reform. The Government will work with businesses and individuals to mitigate the potential administrative burdens of any future changes.”

There little doubt that HMRC are keen on introducing IR35 reform into the private sector, however whether this could be introduced from April 2019 as predicted is now looking less likely. Whilst this presents some continuing uncertainty, it could mean that HMRC do not intend to rush into it. This could also be an indication that HMRC are actually going to listen and that they acknowledge the scale of such reform.

The delay in releasing the consultation may also be due to heightened criticism in the media.  The CEST tool has been indirectly criticised in the case of Christa Ackroyd and directly in yesterday’s DCMS Committee meeting at which four BBC presenters and a leading tax barrister presented evidence to support claims of being forced into a PSC structure by the BBC. HMRC’s CEST tool remains in BETA mode and is unable to provide a determinative opinion in more borderline or complex IR35 circumstances. While it is yet to be considered fit-for-purpose by industry professionals, it is hard to see any plausible extension of the reform seen in the public sector last year using this tool.

There are still therefore quite a few creases to iron out and with the current media interest, it is important for HMRC to tread carefully and not approach further reform without properly considering the consequences.

I would urge any contractors who have not properly considered their IR35 status to do so now.  It is far better to face such uncertainty at least with the knowledge that you know where your status lies.

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