HMRC responds to IR35 petition

 

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IR35 petition – poorly worded perhaps, but the response was far, far worse

The hastily-constructed IR35 private sector petition has been responded to overnight. As Dave Chaplin and others quickly pointed out, the response is mainly cut and paste of earlier copy. But one paragraph in particular exposed the massaging of the truth that HMRC and others like to rely on when justifying their latest big idea.

The petition asked for IR35 not to be rolled out to the private sector. Of course, IR35 already affects the private sector. But the public sector changes that commenced in April 2017, moving decision liability up the supply chain, have not yet arrived in the private sector. So the petition was poorly worded. But the responders knew what it meant, and they referred to that clearly.

Now, they’ve included this little paragraph in their official response:

“This is not a new tax on the self-employed. IR35 only applies to those who work like employees and would have been employed were they not working through a company. Genuinely self-employed individuals continue to be unaffected, as has been the case for over 15 years.”

This is rubbish.

Or at least, in respect of the impact of the April 2017 changes, this is rubbish. IR35 has not changed – correct. But in the public sector, HMRC forced and or bullied public sector bodies into using the ESS, then the CEST exclusively to assess IR35 status – both online tools that ignore parts of employment status law (MOO) and which don’t agree with case law anyway in many situations.

By insisting on the use of this tool, in reality, IR35 was changed because a balanced, legally robust status assessment wasn’t made, a tool-enforced, partial assessment was made, and public sector end users were led to believe they had no option to get other advice alongside this. This position was explicitly communicated by HMRC to public sector bodies, despite the law saying nothing of the sort.

This lead to blanket determinations, and a large number of workers who were given very little time to understand what was going on and what they should do next (due to the ridiculous timetable and late release of the online tool) ending up working through non-compliant providers.

Of course, it’s hard to see such bullying tactics working in the private sector, especially as we make the UK a great place for business. Brexit Britain needs to be a good place for international businesses to sit, and they won’t just roll over and accept Government redefining employment status by the back door.

Big business is more likely to have project-based assignments and need agility in its service providers and other temporary and permanent workforce. By putting these very people in its sights, the Government is playing a very dangerous game indeed.

No-one around the IR35 debate thinks things are working perfectly. Some change is needed. But it should be the right change.

For what it’s worth, the petition, although not constructed as well as it might have been is here. If you haven’t signed it and are worried about HMRC ignoring case law and pretending they’re not, I’d sign it anyway.

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