Contractors' Questions: Why is IR35 being extended to office-holders?
Expert’s Answer: It seems to me that all this new guidance on IR35 has come about because of the proposed ‘Controlling Persons’ legislation which is now shelved.
Many of the responses to the Controlling Persons consultation, including my own, could see no reason for such new legislation when we already have IR35, which deals with these types of cases.
It seems likely that some confusion came to light and as a result of scrutiny of the IR35 legislation this amendment was felt necessary. The main issue with IR35 is and always has been NIC, and ‘office holders’ have always effectively been caught for IR35 under the NIC rules.
Having seen some of the industry comments on this proposed amendment, and the claims that many new cases will be brought under the IR35 rules, it leads me to wonder if some IR35 advisors have been oblivious to the NIC rules that have been in place for many years. We have always advised according to the NIC rules, so I do not expect that this will have any major impact other than for those who may have been ignorant of IR35 in the first place.
The expert was Kate Cottrell, co-founder of employment status specialists Bauer & Cottrell.