United Front against Private Sector implementation of IR35
Last week, the Association of Independent Professionals and the Self Employed (IPSE) and PeoplePerHour (PPH) released their latest Confidence Index. This revealed that UK contracting professionals were more confident in the state of self-employment for the first time in two years.
While this is promising, the controversy over IR35 legislation and the possibility of its implementation into the private sector remains a threat to this confidence. Freelance UK point out that the figure of those self-employed in the UK dropped by 38,000 between April and June this year.
With such mixed results, authorities are questioning the implementation of IR35 into the private sector.
The Recruitment and Employment Confederation (REC) have put forward their own recommendations to HMRC, ahead of any implementation of IR35 into the private sector. Recommendations include a HMRC review on the impact that IR35 has had on the public sector, resolving issues that have manifested during this implementation.
REC also argue HMRC should wait until government consultations regarding the Taylor review on modern work practices have concluded. Introduced in July 2017, the Taylor review examined modern working practices in the UK. The review argued that IR35 was in desperate need of clarification, to ensure affective and correct implementation of the tax on the self-employed.
A significant recommendation made by the REC was that HMRC must allow businesses more time to adequately prepare their software systems for the changes IR35 would bring to the private sector.
Other authorities have united with this claim, with the Association of Accounting Technicians (AAT) suggesting that private sector businesses will need at least one more tax year to prepare for the introduction of IR35.
Seb Maley, of Qdos Contractor, furthers these claims. Commenting on how private sector firms should manage IR35 reforms, he argues that ‘blanket decisions’ on contracts should be avoided.
If this is the case, businesses must be provided more time by HMRC, to ensure the avoidance of the mistakes that have taken place as IR35 has been introduced into the public sector.
Contractor UK compounded this united front, revealing that HMRC themselves topped the league table as the main culprits of ‘blanketing’ decisions on IR35 legislation.
Will HMRC Listen?
With the consultation on IR35 implementation on the private sector finished, this united front will have to wait to see the results.
While we hope HMRC listens and ensures that the UK’s self-employed get the clarification and rights they deserve, the pragmatist in us advises businesses and contractors in the private sector start planning for the imminent introduction of the regulation. That means developing a clear set of criteria to establish whether a contractor is genuinely in- or outside IR35, and building a war chest for the likely increase in day rates that will come with it.