IR35 advisers 'not holding their breath' about public sector IR35 research

Advisers on IR35 admit they aren’t holding their breath that HMRC’s impending public sector off-payroll research will say anything significant.

And some status experts say that the research, recommended by a Lords inquiry, cannot afford to say anything significant, because there’s next to no time to adopt any of its findings.

 “Publication is promised ‘before April 2021’. That does not leave [us] very long,” says IR35 expert Kate Cottrell, alluding to a private sector version of the rules biting in just eight weeks.

“We can only hope that despite this time pressure – and we’re already into February, that we get a joined-up response to all [status-related] issues. Though I am not holding my breath.”

'The research is on track to be released'

Asked yesterday whether the release of the research has been delayed, perhaps due to covid-19, a spokesman for HMRC told ContractorUK that it had not, saying it was “still on track.” 

But accountant James Poyser probably won’t be spending his mornings between now and April sitting on HMRC’s website, refreshing the page in anticipation.

“I would fall off my chair if the public sector research had any useful and significant recommendations that were accepted”, he says.

“The only thing HM Treasury appears willing to do is to sign-off a few webinars and factsheets.”

'Government suits its own reality'

Former tax inspector Andy Vessey confirmed yesterday that there has been an uptick in the IR35 education programme, and he commended HMRC for being more “proactive”.

But he too says not to expect a game-changer. “Whatever the findings…it will not alter the course of the extension of the reforms into the private sector,” Mr Vessey said last night.

As to all the IR35 advisers’ very grounded expectations of the research, another of them explained: “It’s widely known that previous independent research released shortly after the public sector reforms in 2017 did not contain the full context… implying that government just released a report more suited to their version of reality.”

The adviser, Chris Mattingly continued: “When you then look at the government response to the [Lords’]….inquiry into the off-payroll working rules, it’s fairly evident that they didn’t fully listen or act on the concerns raised. Again, they chose to respond in a way that suited their agenda.”

'Expect HMRC's usual mantra'

So the public sector IR35 research will “inevitably” say that compliance has improved and that more tax has been collected due to the 2017 rules, Mattingly, boss at IR35 Navigator, added

By contrast, should the research acknowledge “problems”, added Mr Vessey of Kingsbridge Contractor Insurance, “then expect HMRC’s usual mantra – that its ‘further education and support’ will resolve these.”

That education and support will likely be in the shape of more HMRC webinars and off-payroll guidance -- “being updated almost daily,” says Ms Cottrell, who also used to work at the tax department.

'People worried about things other than IR35 right now'

“But [with covid-19 still dominating our lives], people are right now more worried -- quite rightly -- about things closer to home,” the Bauer & Cottrell founder says.

“HMRC are going all out with numerous webinars and…[the like]…but if folk have not got the time [or inclination] to tune in then it will prove to be an incredible waste in an effort to push this through.”

At inniAccounts, where Mr Poyser is CEO, there is also concern for the future. “I suspect we're heading into some serious, predictable yet unintended consequences of IR35 reform,” he said. “Particularly following the failure [of the government] to renew Matthew Taylor's contract [as Labour Market Enforcement director].”

'Not convinced government learnt IR35 lessons'

In its April inquiry last year, the House of Lords Economic Affairs Finance Bill Sub-Committee said: “We are not convinced that the government has learnt lessons from the application of IR35 in the public sector.

“If the government continues with its plan to introduce the off-payroll reforms in April 2021, we recommend that the government undertake an independent review of the implementation of the off-payroll rules in the public sector and an analysis of the impact of those rules on the labour market.”

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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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