Contractors urged to ‘evidence-base’ their Lords’ IR35 inquiry submissions

Give examples. Give real-world case studies. Give anecdotes. And maybe duck questions where contractors cannot respond by giving those examples, real-world case studies or anecdotes.

Such is the advice to Personal Service Company directors who want to contribute to the Lords’ inquiry into private sector IR35 reform, and the nine questions which it poses.

“[Take it] from someone who was a senior policy adviser, make sure that your submission is evidence-based,” says IR35 expert Rebecca Seeley Harris, who once advised the Office of Tax Simplification.

'Saying it's not fair won't help the Lords'

She also recommends: “Everyone knows [that the April 2020 off-payroll rules are] ‘not fair,’ but that doesn’t help an inquiry to make policy-based recommendations.

“The Lords need real evidence of the effect this legislation is having on the sector. You don’t have to answer all the questions but answer the ones where you can have most impact”.

Qdos confirmed the importance of contractors not distracting the Lords with speculative or emotive testimonials in their submissions, due in no later than two weeks tomorrow.

'Look at the only facts'

“It’s vital that the Lords Select Committee looks at [only] the facts around [the] IR35 changes,” says the status advisory’s CEO Seb Maley.

 “[For example] has public sector [IR35] reform worked? No, not when you consider that thousands of contractors were unfairly forced inside IR35.

“Is CEST capable? In its current state, it simply isn’t fit for purpose. What effect might IR35 reform have on contractors? If mismanaged, there is a risk the private sector will repeat the mistakes made in the public sector.”

'The peers want to learn more about contractors' real-life experiences'

The specific nature of the Lords’ questions further implies that anything short of tangible, real-world, demonstrable answers probably won’t cut it. Their scope impresses APSCo.

“The Finance Bill Sub-Committee…[shows an] excellent grasp of the key issues that these reforms have raised,” the professional staffing body says.

“The [Lords’] call for written evidence seems to recognise that changes to IR35 in the public sector were not as straightforward as HMRC suggests.

“And we are encouraged by the [committee’s] desire to learn more about the real-life experiences of individuals and organisations affected, as well as the broader impact on the labour market.”

'Turning their backs on contracting'

Seeming to answer the ‘broader impact’ question, insolvency firm Clarke Bell said:

“We have seen a proliferation of contractors turning to us for advice on how to close down their limited companies and pursue alternative careers as they turn their back on contracting.”

So, says co-founder John Bell, the firm welcomes the Lords inquiry because “the legislation has had a damaging effect on the public sector and is set to have a devastating impact on contractors and those firms that hire them in the private sector.”

Bell’s experience appears to be the sort of evidence that Lord Forsyth and his committee are seeking. Launching the off-payroll rules probe last week, the Tory peer said:

“We are interested in how this change [to IR35] will work in practice, and how it relates to wider changes in working arrangements.”

'IR35 brought to life with personal examples'

Hopeful that it’s not only the Lords who want to gauge the reform’s impact on people’s lives, contractor ‘Mike H’ sought out his local MP.

“What he said…helped very much was how IR35 was brought to life with personal examples. Do that [with this Lords’ inquiry too].

Addressing his fellow PSCs, the contractor’s LinkedIn post on meeting his constituency MP also states: “He [my MP]was particularly interested in the impact on the flexible workforce. Taking another contractor along who contracts in the public sector also added value.”

'Real examples of IR35 reform-problems, coherent solutions'

A recruitment executive, in a related online post said: “My view [is that] IR35 is a system of taxation incompatible with both the gig economy of the UK, and the large rise of PSCs providing flexible core services to a range of private and publicly owned companies.

“It should be scrapped in favour of a more progressive and suitable system which reflects the manner in which increasingly large parts of our population works. All current and recent IR35 reforms should be paused while this solution is sought.”

At IR35 advisory Re Legal Consulting, its founder Ms Seeley Harris told the executive: “The [best] way to approach this is to respond to the current House of Lords Finance sub-committee review. With some real examples of the problems it’s causing and some coherent solutions.”

Editor's Note: To make a written submission to the Lords IR35 reform inquiry, please click here.

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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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