Repeal and reinstatement of IR35 off-payroll rules didn’t cost taxpayers a penny extra, minister claims

The government did not incur any additional costs as a result of announcing the repeal and subsequent reinstatement of the off-payroll working rules, a minister has claimed.

Reflecting on the claim, made last week in the House of Commons by Treasury minister Victoria Atkins, an IR35 contract reviewer said that they found it “hard to believe.”

But responding online to the reviewer, Seb Maley, CEO of Qdos, other advisers to contractors said that the wording of Atkins’ answer was key.

'Diverting existing resource'

The minister said there was no “additional cost,” strongly implying there was some level of’ ‘diverting existing resource,’ said Workwell business manager Stuart Marquis.

“There’s a cost to be calculated [to deal with the repeal and reinstatement announcements], although it may never have taken the form of additional spending,” he posted.

Chris James, also of Workwell, agrees that the wording of the oral submission to the House of Commons was critical -- but in relation to the questioner too.

'Planning work must have had a cost'

“Perhaps the wording of the question wasn't quite on point,” said Mr James, referring to the question was which tabled by James Murray MP.

A specialist in limited company accounting, Mr James added: “We can assume planning work was done in the few weeks between the IR35 repeal announcement and reversal. That must have had a cost.”

In fact, “no doubt” money was spent by HMRC to plan how the repeal would work; what the department had to do, and how their IR35 investigations would be impacted, ex-tax official Kate Cottrell told ContractorUK.

'From the top down at HMRC'

Engaging the legal team to draft IR35 reform’s repeal, and assessing the impact on staff engaged in off-payroll compliance -- including identifying which roles to migrate them to would cost as well, the co-founder of Bauer & Cottrell added.

“HMRC -- from the top down -- would have had to give some time to these issues and activities straight away,” continued the former inspector, who previously advised HM Treasury. 

“I also suspect that there was considerable work involved in briefing the new chancellor, together with conveying HMRC’s fears that non-compliance would return to previous levels. Someone had to write a risk assessment.” 

'Unreliable'

In his question to Ms Atkins, the financial secretary to the Treasury, Mr Murray asked HM Treasury to “publish the estimate of the cost to the public purse…of removing and reinstating IR35 rules”.

The minister replied: “The government did not incur any additional costs as a result of the announcement of the repeal and subsequent reinstatement of the off-payroll working rules.”

Declining to be named, a veteran adviser to contractors reflected last night: “This is an unreliable claim that no costs were incurred, and the repeal issue has been forgotten by many just like the government that announced it.”