Contractor sector split over its IR35 reform review approach

An IR35 expert says the contractor sector should work on making April 2020’s reforms workable, on the basis that an abandonment of them by the new government is unrealistic.

Rebecca Seeley Harris, who has had her work for the OTS personally commended by the previous chancellor Philip Hammond, says that if Mr Hammond’s successor sticks to his pledge, a new approach is necessary.

“Even if there is a review,” says Harris, the founder of status advisory Re Legal Consulting, referring to Sajid Javid’s pledge, “it is unlikely to result in the reforms not going ahead.

“So the review [and by extension the contractor industry] should therefore concentrate on making the reforms workable.”

As to what ‘workable’ IR35 reform might look like, she said that mid-sized and large businesses should be free to hire PSCs without the “constant risk of an HMRC investigation.”

Contractor trade body IPSE sounded like it too might support the idea of making the off-payroll rules more palatable when it said yesterday that it was looking for a ‘fairer deal.’

Andy Chamberlain, deputy director of policy for the Association of Independent Professionals and the Self-Employed (IPSE) also said: “We will work closely with him [the chancellor] to make sure this becomes a reality.”

But the association also told ContractorUK that it will “push hard” to stop the IR35 changes passing into law from April – something that Re Legal Consulting believes is unlikely to be achieved.

“That said, the legislation is unworkable in its current form and is prompting the use of blanket assessments by many of the large corporations,” the advisory said.

“To lose the flexible workforce at a time when the country most needs it because of Brexit, seems very short-sighted.”

To the Association of Recruitment Consultancies, what is short-sighted is to try to change or amend IR35 in isolation to employment status, as December 2018’s Good Work Plan proposed.

“It makes little sense to proceed with the IR35 change without reviewing the employment status rules,” says ARC’s Adrian Marlowe.

“The UK has led the way by recognising that flexibility of engagement is attractive to both employers and workers. This should not be lost, as is threatened by the proposed IR35 extension.

“It must be possible to protect the rights of workers whilst at the same time allow for flexibility without penalising businesses. Tax avoidance stems from the ambiguity that currently exists.”

A halfway house between IPSE’s ‘scrap the reform’ stance and Re Legal Consulting’s ‘make it workable’ position, appears to have been found by the Recruitment & Employment Confederation.

“We welcome the Conservatives’ promise to review the IR35 tax reform….[but] implementation must be delayed,” the confederation says.

Until the government clarifies whether contractors face a review, a deferral or something else with the draft IR35 legislation, contractors, agencies and clients appear to be in limbo.

But Gorilla Accounting believes that the uncertainty has reduced from what it was. “Contractors and freelancers up and down the country can now get on with their business with a far clearer idea of how the regulatory environment for the self-employed will develop.

“However,” the firm added, “there are still unanswered questions for the new government on this issue, and we hope that its promised review of IR35 will be a key priority.”

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