If HM Revenue & Customs (HMRC) was hoping for its recent official IR35 briefing note on reform to the off-payroll working rules from April 2020 to reassure the UK’s contractors and those who assist them, it appears this was very far from the reality.
Indeed, the ContractorUK website said that all five industry advisers it contacted about the 900-word IR35 guidance – issued on 22nd October – “gave underwhelmed, cautious or just plain negative assessments.”
“There’s simply nothing new here”
HMRC has defended its looming reform to the rules by stating it “estimates that, outside of the public sector, only one in 10 people who should be paying tax under the current off-payroll working rules are doing so correctly.
“These reforms will ensure the right amount of tax is collected. This will level the playing field between those who were applying the rules and those who were not… contractors who are following the existing rules correctly will feel little impact.”
However, one of the observers quoted by the ContractorUK story that took a dim view of HMRC’s briefing note was a law firm that described it as “not as yet the substantive and detailed guidance that the recruitment industry and its clients want and need.”
Meanwhile, a somewhat less diplomatic provider of payroll and accountancy services said: “Bar one or two interesting statements, there’s simply nothing new here.”
IPSE condemns ‘cold comfort’ provided by the note
Deputy Director of Policy for the Association of Independent Professionals and the Self-Employed (IPSE), Andy Chamberlain, was no more approving of the briefing, which he dismissed as “cold comfort to the millions of self-employed who are worried about the looming disaster for the sector when the changes to IR35 come into force next April.”
He added, referring to HMRC’s claim that legitimately self-employed people ‘will feel little impact’ from the changes: “Tell this is the thousands of contractors working for Barclays, Lloyds, HSBC and Tesco Bank who have already been told they must move into umbrella companies, go PAYE or cease contracting for these organizations altogether. There will likely be more such damaging decisions as April approaches.”
Chamberlain also voiced his discontent at HMRC “still stubbornly standing by the CEST tool, which is the source of so many IR35 woes. HMRC has lost the vast majority of IR35 tribunal cases since 2017 – based on CEST tool rulings.” His words contrasted with the department’s insistence that “the tool provides accurate results and HMRC will stand by the result produced by the tool provided the information input is accurate and the tool is used in accordance with our guidance.”
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