IR35 assurance demand 'won't be made on all contractors'

Not all contractors working off-payroll at public sector organisations are expected to have to provide assurance that they are outside IR35 and therefore not disguised employees, the Treasury has signalled.

Although it was confirmed that all public sector departments have the contractual right to request the assurance, the Treasury is “not necessarily expecting hiring managers to do so in every single off-payroll situation”.

Instead it is more likely – in the Treasury’s eyes - that the hiring manager, on behalf of the public sector outfit, will “probably sample a percentage of such arrangements,” rather than approaching every single contractor.

The disclosure, by a Treasury official at an APSCo meeting, runs contrary to the popular belief among recruiters and contractors that most, if not all public sector staff engagements face being checked for compliance with IR35.

“It would appear that this is not the understanding or expectation of the Treasury,” the Association of Professional Staffing Companies said, reflecting on its October 5th meeting with Treasury official Natalie Toms.

“It’s clear from members’ experiences so far that there has been huge inconsistency in the flow down of these guidelines.

“[But] both Natalie and Sarah [Radford of HMRC] were clear that the Treasury guidelines are not about tax avoidance, but rather about stopping disguised employment.”

Elsewhere at the meeting, APSCo said it was concerned that the public sector outfit has the right to pass on to HMRC details provided by contractors in situations where the hiring manager (on the outfit’s behalf) does not feel that adequate proof of IR35 compliance have been given.

The association warned: “This could see a huge amount of information flowing into HMRC because hiring managers are unable to decide upon the value of the assurances provided by the contractor.”

But the Revenue, represented by Ms Radford, said it would only be passed information pertaining to an off-payroll worker and their engagement where the contractor has, when asked, failed to provide what she called “appropriate” assurance.

“HMRC is not providing an assurance service for public sector departments,” APSCo said, reflecting on the official’s comments. “Aside from the confidentiality issue, her team does not have the resource to undertake this.”

Editor’s Note: Further Reading –

IR35 in the public sector – a contractor’s guide

Public sector issued guide on contractor tax affairs

IR35 suspect 'fast-tracked' under off-payroll rules

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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