IR35 Forum Members
It is a huge own goal say the Professional Contractors Group and four other IR35 Forum members. They accuse HMRC of a lack of courage.
When the Government decided that it would keep IR35 it said that it would set up an IR35 Forum. This would get HMRC together with groups in the industry like the Professional Contractors Group, APSCO, REC, FCSA and FSB who represented freelancers, the recruitment sector and small businesses.
The idea was that it would bring much needed clarity as regards IR35 as far as contractors were concerned.
However, having sat with the IR35 Forum for months and taken on board the opinions of the others, HMRC then went native. They decided their own weighting factors for the new online quiz. This purports to show contractors if they are caught or not be IR35. However, it actually ‘shows‘ virtually all contractors caught by IR35.
Now 5 of the other members of the IR35 have criticised what HMRC have done. They have said that the outcome doesn‘t reflect the discussions that were had at the IR35 Forum.
Missed Opportunity to Clarify IR35
They say that HMRC have missed a huge opportunity to clarify IR35 and say that where contractors are caught or not is now more obscure than ever. Contractors who have won their cases are now doing the test and finding themselves inside IR35. That’s according to the test anyway.
The other Forum members are united in their view that this does not reflect what has been promised by the Government.
They feel that the scoring systems and the IR35 Business Entity Tests are counterproductive.
Ann Swain from APSCo said they all felt exasperated as HMRC wouldn‘t listen to their advice.
Lack of Courage
Chris Bryce, PCG Chairman and another IR35 Forum member agreed with this view. He said:
‘HMRC‘s new guidance demonstrates their fundamental lack of courage and commitment to improve the operation of IR35.’
The main concern is the scoring of the tests but HMRC have refused requests from the 5 external groups to change them.
The external groups say that the scoring is unfair and puts virtually all freelancers at High or Medium risk of being inside IR35.
HMRC Points System
Despite this HMRC have refused to change their points system.
An alternative scoring system was suggested by the panel but rejected by HMRC.
Said Martin Hesketh, FCSA‘s representative on the Forum:
‘The proposed scoring system undermines the business entity tests altogether.
IR35 Forum Majority
‘It will push a disproportionate number of businesses into the high-risk category. In so doing this will prevent genuinely high-risk cases from being identified.
‘An alternative scoring system, backed by a majority on the Forum, was suggested but to date those suggestions have been rejected by HMRC.’
Gillian Econopouly, representing REC, said, ‘Although we are disappointed by the progress to date, we will continue to strive for a better outcome for businesses affected by IR35.’
So, that’s what IR35 Forum members think.