HMRC endorses IR35 blanketing on the back of a single contract
The taxman has used the latest IR35 Forum meeting in November to try to clear up confusion he appeared to create over so-called ‘blanket’ IR35 decision-making.
Officials at HMRC had initially said that it could merely be “appropriate” if engagers made an across-the-board decision on workers whose roles had the same Terms and Conditions.
Then, sounding more in favour, they said that if PSCs on those matching T&Cs were hired to execute identical roles, the “same” IR35 decision for all of them would actually be, “correct.”
Now, HMRC says that although clients who deem all roles and PSCs inside IR35 would “not [be] in line” with the rules, they will comply if they first look at just one of their PSCs’ contracts.
Again though, there must be “identical facts and terms and conditions” applying to both the one-reviewed and other contracts, HMRC argued at the November 21st meeting.
So where T&Cs and roles and facts match for all workers -- an unlikely scenario some may say, and “having reviewed one contract”, clients need not individually probe the other PSCs.
While legal experts will now pour over whether this new interpretation breaches the ‘reasonable care’ clause (which indicates a case-by-case assessment), HMRC also used the November meeting to stick up for the IR35 decision-making of one of its own.
“Articles posted online in the contractor press…included allegations against a named HMRC official,” heard the meeting, the minutes for which were published on Friday.
“HMRC was clear that it is inappropriate for an official to be named, and that the articles had misrepresented what had been said.”
ContractorUK covered the alleged activities of the official -- but did not name the official.
And the claim of ‘misrepresentation’ is difficult to verify, as HMRC has a policy of not commenting on individual cases.
'Cannot be completed'
But the November minutes do provide other sorts of confirmation -- three in fact.
Firstly, it is that “detailed preparation” for the private sector off-payroll rules “cannot be completed” until the legislation and guidance is published, forum members told HMRC.
“Draft legislation is expected to be published in the summer,” the Revenue said in reply, further confirming statements made to ContractorUK after the Budget in October 2018.
It added: “Whilst the content of the consultation will be decided by ministers, it will include as much certainty as possible on the future framework of the rules.”
'Burden for agencies'
The second confirmation relates to PSCs facing the potentially arduous task of having to weigh up each and every contract they win to see if the end-user makes it caught by the rules.
But it’s not just contractors who face the hassle.
“Forum members suggested that the small business exemption would increase the administrative burden for agencies providing workers, as they will now need to establish whether the exemption applies,” say the minutes.
The third confirmation which the November minutes provide will perhaps reassure contractors -- and their contractual partners like recruiters, and engagers -- the most.
“HMRC will not carry out targeted campaigns into earlier years for individuals who are found to be within the rules,” the Revenue said.
Further reinforcing the Treasury pledge made in Budget 2018’s Off-Payroll Policy Paper, HMRC added: “Businesses’ decisions about whether their contractors are within the rules will not automatically trigger an enquiry into earlier years.”
Other developments at the Forum meeting included HMRC’s refusal to assess the public sector framework any further, a (rejected) call for promised regulation to hit non-compliant umbrellas to be brought forward, a push for “real-life” examples in HMRC’s forthcoming guidance and CEST ‘enhancement’ sessions.