HMRC 'unwilling to give any steer' on IR35 changes

The taxman is “unwilling to give any steer” on his approach to April’s IR35 changes to the very parties who will be liable and responsible for those changes, an agency body alleges.

This current reticence by HMRC to provide the parties with the “real detail” on how the new rules will work makes it probable that it won’t be released until next year, says APSCo.

The agency body reached this conclusion after it held a meeting with the Revenue’s policy officers Neil Chattell and Julie De Brito, who took its members’ questions on the proposals.

“We probably won’t have any real detail on the guidance until the March [2017] Budget”, one member of the Association of Professional Staffing Companies said after the meeting.

“[That would give] us a matter of weeks to implement any changes.” Asked by ContractorUK yesterday if the sought-after detail may emerge earlier, in next month’s Autumn Statement 2016, HMRC declined to be drawn.

So while AS 2016 is expected to forge ahead with the IR35 changes (HMRC described them yesterday as ‘measures’ instead of ‘proposals’), it may contain little more than a nod to them.

If so, members of APSCo will be irritated; they already say they are “frustrated at the lack of concrete answers” by the Revenue at the meeting, notably in four main areas of the reforms.

Firstly, the department was asked but was unable to shed light on the timeframe in which agencies (one of two parties liable for the changes), will be expected to implement them.

Secondly, the department was asked but was unable to pinpoint the scope of the reform, such as whether it covers placements into contractors delivering services to the public sector.

Thirdly, the department was asked but was unable to assess the risk to the public sector of losing talent and the cost, in financial terms. It gave “no substantive answers,” APSCo said.

And fourthly, asked if agencies would have a “legal defence” if PSCs fed agencies incorrect information to use in the digital IR35 tool, HMRC could only say it was “looking at it.”

“You have had a good two to three years to prevaricate and procrastinate on this issue”, one APSCo member blasted at the meet, which was attended by APSCo’s lawyer Tania Bowers.

“HMRC were unwilling to give any steer on their approach,” she said. “Our members...are very concerned they will be left with no more than a matter of weeks to implement changes in Spring 2017.”

But a spokesman for HMRC implied its approach to date has been thorough, and will be an informative one to those parties affected by the changes.

“HMRC has consulted extensively on the reform, holding over 30 roundtables and receiving over 200 written responses”, the spokesman said. “There will be publicity and guidance about the changes to enable customers to understand their responsibilities and where they can go for help and advice.” 

APSCo fears that PSC contractors have already decided where they will be going: “Our members are telling us that skilled, independent contractors are likely to leave the public sector rather than see their rates reduce significantly.

“[This will] potentially lead to a talent drain from central government and the broader public sector just as the UK triggers Article 50.”

But HMRC shrugged off any large impact. “This measure only affects the estimated 20,000 public sector workers who should be paying under the current rules,” the spokesman said.

“To make the process of determining whether or not the Intermediaries rules apply as simple and certain as possible, HMRC will provide a new interactive online tool. Work to develop the tool is progressing, with a dedicated digital team in place.” 

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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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