Chancellor Rishi Sunak Backs IR35 Reforms. Contractors Doomed

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Chancellor Rishi Sunak contractors and IR35
Chancellor Rishi Sunak contractors and IR35

Chancellor Rishi Sunak Backs IR35 Reforms

Chancellor Rishi Sunak has said that the IR35 reforms will have a soft landing. He said that the Government and HMRC will not be heavy handed in the first year.

Said new chancellor Rishi “I’ve spent time with HMRC to ensure they are not going to be at all heavy handed for the first year to give people time to adjust as well which I think is an appropriate and fair thing to do,”

Contractor Questions on Chancellor Rishi Sunak

  1. What will be the outcome of the current IR35 review?
  2. So, what pressure has Chancellor Rishi Sunak bowed to?
  3. What are HMRC doing to help businesses implement the IR35 changes?
  4. How come Treasury Minister Jesse Norman was not aware of blanket banning?
  5. Will the IR35 Review stop the blanket banning o f PSC contractors?
  6. Is the new Chancellor Rishi Sunak friendly to contractors?
  7. Why is the blanket banning of PSC contractors grossly unfair?
  8. Is Freelance IT Consultant Dominic Cummings freelancers last hope of a fair hearing?
  9. What concessions have the Government made to big business on IR35?

What will be the outcome of the current IR35 review

Chancellor Rishi Sunak said that the current IR35 review “will have some tweaks and improvements to make sure that the transition is as seamless as possible”.

Chancellor Rishi Sunak will publish the results of the review prior to his Budget on March 11th.

The IR35 changes will affect 230,000 freelancers and contractors and tens of thousands of companies. They come into effect on April 6th.

What pressure has Chancellor Rishi Sunak bowed to

Chancellor Rishi Sunak has bowed to pressure from our major companies here in saying that there will be tweaks and that they won’t be heavy handed in the first year.

Businesses are saying that it will increase red tape and will increase costs.

According to the Treasury “We recognise that this is a significant change for businesses, and as the chancellor has said, HMRC wants to take a supportive approach to help businesses to apply the rules correctly going forwards.”

So, HMRC will help businesses to apply the rules ‘correctly’. I think we all know what applying the rules correctly means to HMRC.

What are HMRC doing to help businesses implement the IR35 changes

It seems that HMRC have set up dedicated teams to supply education and support to businesses over the IR35 changes. That includes direct support to 2,000 of Britain’s biggest businesses. They are also directly communicating with 40,000 medium sized businesses.

It seems they are having all sorts of workshops and round tables.

One presumes that is why all the UK’s major businesses are blanket banning the use of personal services company contractors. HMRC understand IR35 so well that they have lost 80% of cases they have brought against contractors at lower Employment Tribunals.

How come Treasury Minister Jesse Norman was not aware of blanket banning

If they are supplying all this support directly to businesses how come Treasury Minister, Jesse Norman, did not know that so many of the UK’s companies are blanket banning contractors using personal services companies. He denied he knew about the blanket banning in Parliament. How could he not have been aware of it?

HMRC must be acutely aware of it. Yet they are letting it happen. This is despite the fact that it is against the spirit of the reforms which say that contractors must be assessed separately and which specifically doesn’t allow blanket assessments. Blanket bans and blanket assessments come down to the same thing in the end.

Will the IR35 Review stop the blanket banning o f PSC contractors

It could be that blanket banning of PSCs will be one of the ‘tweaks’ in the IR35 review. However, that doesn’t sound like a tweak.

Also HMRC must be very aware of it and they have done nothing to stop it. Indeed, with so many of our companies blanket banning PSC contractors they may well be encouraging it.

Is the new Chancellor Rishi Sunak friendly to contractors

Said new Chancellor Rishi Sunak, the reforms are “going to mean some changes because some people unfortunately were operating in a way that they weren’t paying the tax they probably should have been, because essentially they were employees but they were being taxed as if they were self-employed.

“And there is quite a difference there. And it’s not fair to all the people who are employed that someone else could be doing the same job and paying less tax. Because ultimately that tax pays for the NHS and social care and everything else.”

This is complete nonsense as you are not comparing like with like. However, it looks as if he has already become deeply ingrained in the culture at the Treasury and at HMRC where they believe all contractors are tax avoiders.

And they are only treating them as employees when it comes to taxation. For any benefits they must supply their own – like a freelancer.

Why is the blanket banning of PSC contractors grossly unfair

If they don’t stop the blanket banning of PSC contractors then this will be grossly unfair. Many contractors who would pass any IR35 test will be paying tax as if they are operating inside IR35.

And although this pledge from Chancellor Rishi Sunak not to be heavy handed seems good, it is woolly. Who is to say what is heavy handed and what is not?

Will it be HMRC?

He has only been in the job a matter of weeks but already it looks like he is already a dead duck Chancellor as far as contractors are concerned. He is already spouting the Treasury and HMRC nonsense.

Is Freelance IT Consultant Dominic Cummings freelancers last hope of a fair hearing

Perhaps the only hope to get blanket banning banned is freelance IT Consultant Dominic Cummings. Perhaps the only hope of getting justice on IR35 is to go above Rishi Sunak’s head to Boris Johnson and Dominic Cummings.

Business can put that pressure on. It will depend really on how many contractors do refuse to take inside IR35 PAYE contracts. If the numbers are large then the pressure could really come on the Government from big business.

What concessions have the Government made to big business on IR35

The Government have already made two concessions to them. They have agreed to go easy in the first year and they have said that contractors can continue to use their PSCs up to April 6th even if the billing date is after that.

But it’s such a shame that a brand new Chancellor is already proving to be just like all the others as far as contractors are concerned.

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