IR35 Forum: July's minutes are just a one-sided view
I say ‘quietly’ because it is apparent that they were not circulated for comments by forum members beforehand, writes IR35 forum member and Bauer & Cottrell IR35 specialist Kate Cottrell. Nor were they announced on the front page of HMRC’s website as they usually are.
Readers will see that the minutes in their current form suggest that the implementation of the off-payroll rules in the public sector has been a resounding success from HMRC’s perspective. Those taking more than a glance will also see some major concerns raised by external members of the forum (non-HMRC members), have been dismissed. For example:
“HMRC has no evidence of significant impact on attrition rates of contractors working in the public sector.”
Then note, with regard to contractor pay -- “HMRC was not aware of any significant movement in contractor rates but this is a contractual matter.”
And in regard to contractors finding out the reasons for the IR35 decision made by the public sector body -- “HMRC hope that these reasons would be made available to other parties further down the chain. However, the only person who is entitled to the reasons is the one who has the contract with the client.”
Concerns raised regarding the sheer lack of awareness of the rules by public bodies (other than central government departments), was also dismissed on the grounds that HMRC has been working closely with these bodies and will try to do a bit more.
HMRC also heralds the success of the IR35 status tool -- 450,000 uses with an 85% determination rate. Oh, and hardly anyone used the IR35 helpline in July.
Everything is rosy or is it?
I have no doubt that more revenue will be generated by these new rules from those that should have been paying up under IR35 and the shift to compliant umbrella companies. But the implementation of these new rules has been, from this side of the fence, a mess. It’s also a mess that continues.
More worrying is the rise of clearly non-compliant “solutions,” and we have yet to see what contractors will do about their incorrect IR35 status at tax return time. Rather than meeting HMRC’s aim of reducing the IR35 population and achieving IR35 compliance, I fear they could see their workloads increase dramatically dealing with the fall out.
Imagine that you are hoping that our government’s top ministers will agree to the roll out of the off-payroll rules to the private sector. Imagine you have only a few weeks to convince them to do so. How would you present the minutes of the only forum concerned with IR35?