Contractors IR35 Status Change
The Government has imposed a change on who decides a contractors IR35 status. Previously, contractors IR35 status was their own decision.
Now, the Government want those hiring contractors to make the decision.
And there will be heavy financial penalties on those fee payers who get it wrong.
That’s if they get it wrong in contractors favour.
There are no penalties on those who get it wrong in HMRC’s favour.
This will come into effect in April 2020 – so there’s still time to stop it.
Check Employment Status for Tax Test
To make it worse, if fee payers make contractors sit the Check Employment Status for Tax test and pass it but later they appear to be inside IR35, there will be no penalties on the hiring company.
So, there will be massive pressure on companies to make contractors sit the test to find out a contractors IR35 status.
However, HMRC created the test. They are not independent, and it they heavily skew it in their favour.
Indeed, freelancers who have successfully fought HMRC over IR35 have sat the test and the test showed them caught by IR35.
Battle Plan for Contractors and IPSE
So what should contractors, and their representatives like IPSE do about this?
IPSE have been working with the Government and HMRC over IR35.
However, as we can see from the results, the Government don’t take a blind bit of notice of them.
They just implement IR35 legislation and contractors IR35 status changes anyway.
Won’t Fight the Conservatives
IPSE have always been reticent about taking on the Conservative Government the way they used to with Labour.
Their main tactic when once again the Government ignores them is to fire off a Press release condemning it.
However, this appears to be more to look as if they are doing something rather than something that gets results.
The should take a lesson from their own early days.
IPSE in the High Court
They took on the Government in he High Court over IR35 – and lost.
So, they concentrated on fighting them at a more micro level.
They helped freelancers fight their cases at the Special Commissioners and General Commissioners at small tribunals up and down the land.
And they were highly successful at it – winning far more than they lost.
Conservatives Will Look at IR35 Again
They have an innate bias towards the Conservatives even rushing out a Press Release just before the 2010 election claiming that the Conservatives had promised them that they would ‘look at’ IR35 again if they got elected.
They did get elected and they did look at IR35 again – and they decided to strengthen it.
Labour were not friendly to freelancers, bringing in IR35 which IPSE opposed. They even marched on the House of Commons.
However, they are not so straightforward when it comes to he Conservatives.
They get suckered in by being allowed to sit on important committees.
In Positions Beyond Their Talent and Abilities
Their founder, Andy White, once accused them of being in positions, via IPSE, that their talents and abilities outside IPSE would not get them to – and being flattered by this.
They should take each Government on its record on freelance issues – and nothing else.
They should be made to write out 100 times “The Conservatives are not our friends”.
Fighting IR35 at Local Level
Then they should look to see how they can fight these changes at the micro level rather than the macro level where they are being suckered in and have had little success.
They get freelancers to send letters and to meet up with their MPs.
However, this is not enough – and it hasn’t worked.
What they should do is to organize themselves at micro level, i.e. at constituency level.
Organize Contractors by Constituency
When someone joins IPSE, they should ask them, along with their name and address what constituency they vote in.
They can probably work that out for current members by their addresses and post code.
They should then organize groups with meetings by constituency up and down the land.
As many of those as possible should arrange to go and see their MP. They should give them a list of all the names of freelancers in the group.
They should also let them know how many freelancers there are in their constituency.
Number of Freelancers by Constituency
They can estimate that figure.
For instance we know that here are 5 million freelancers throughout the land.
We know that there are around 20,000 IPSE members.
So, we can extrapolate that here are 25 people in self employment for ever IPSE member.
Therefore, if there are 100 IPSE members for a constituency we can extrapolate that there are 2,500 self employed people in the MP’s constituency.
So, the IPSE members visiting the MP are representing 2,500 of his or her constituents.
Self Employed in Constituency
Another way of doing this is to divide the 5 million self employed by 650 – the number of constituencies in the UK.
That makes it an average of 7,700 freelancers per constituency.
That’s a figure that would make most MPs sit up.
The freelancers should then ask their MP where they stand on freelance issues like IR35.
IPSE should prepare a standard list for them.
Of course their MPs will soft soap them at a micro level just like they did at a macro level on 2010.
Store MPs Freelance Issues Information
So, IPSE should store this information by freelancer subject, e.g. IR35 and publish that information on their website, i.e. where the MPs across the country stand on freelancer issues.
It should be stated whether they have just promised this or shown it in practice.
When a vote comes on freelance issues this should be updated according to how they voted.
They should store MPs’ voting records on freelancer issues.
This database should be available to the public and the press should be told about it – especially local press.
The MPs should be told all about this – to concentrate their minds.
Local Press Releases on Freelance Maters Like Contractors IR35 Status
The visiting freelancers should tell the MP that minutes of their meeting will be publicised in the local press.
They should also tell the MPs that they will be sending a press release to the local newspaper on any issues that affect freelancers in the future and as to whether the local MP voted for it or against it.
IPSE at macro level can help here.
Campaigning Against MPS Who Vote Against Freelancers
The MPs should then be told that, at the next election, IPSE memebers in the constituency will campaign for the MPs (or candidates) and the party who are most freelancer friendly.
Currently the SNP are most freelancer friendly followed by the Lib Dems (although they did not oppose George Osborne’s decision to keep IR35 when they were in Coalition).
IPSE Should Turn Nasty
Being friendly to political parties and politicians does not work.
Implicitly threatening them with losing them votes works much better.
IPSE need to take off the gloves and start turning nasty.
They may get kicked off important committees – but that hasn’t done them any good anyway.
Getting VAT Change Scrapped
One campaign that did work was when backbenchers forced Hammond and May (sounds like an England batting partnership from the Fifties) to drop their VAT increase for freelancers, pointing out that there was a promise in their manifesto not to do so.
IPSE members at local level combined well with IPSE at macro level to get this stopped.
This is the formula that should be used again.
Representing 5 million voters should get IPSE a lot more clout than it actually has so far.
They need to get down and get dirty – especially at local level.
We know that backbenchers can change the Government’s mind – especially when there is a small majority like now.
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