Network Rail Contractors – 99% Now Caught by IR35 Off Payroll Rules

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Anti Contractor Prime Minister Theresa May
Anti Contractor Prime Minister Theresa May

Network Rail Contractors Now Inside IR35

It has just been announced by the company that 99% of Network Rail Contractors have been assessed as being inside IR35. They will now have to pay tax as if they were employees of the company. They will get no other benefits that accrue to permanent employees like sick pay, holiday pay, maternity leave or pension contributions.

Caught by Off Payroll Rules

Said Andy Chamberlain of Contractors Group IPSE:-

“Network Rail’s assessment that 99% of Network Rail contractors are caught by the off-payroll rules is deeply concerning. These people will now have to pay tax like employees – without any of the rights.

“The preposterously high ratio raises serious questions about how the assessments have been made. Network Rail has openly admitted roles were grouped together and blanket assessed, which undermines Treasury claims that this has not happened.”

IR35 Rules to be Implemented in Private Sector

New IR35 rules for public sector contractors were implemented in 2017. They are going to be implemented in the private sector in April 2020.

The rules changes mean that it will be the fee payer, i.e. the hiring company, that will decide a contractor’s IR35 status. If they get this wrong they may end up having to pay the back tax themselves. So, we are starting to see companies refusing to use limited company contractors.

Declaring All Contractors Inside IR35

The Government and HMRC are terrorising them into declaring all their contractors inside IR35. They don’t want to take the risk.

HSBC have announced that their contractors will have to either take a permanent job or leave before September 2019. Most contractors are expected to leave.

Attack On Contractors by Government and HMRC

Network Rail contractors may just be the advance party. However, this looks like yet another attack on freelancers by the Government and HMRC. The end of contracting as we know it may be nigh.

Said Andy Chamberlain of IPSE:-

“In the NHS, the disastrous changes to IR35 caused chaos and drove many skilled contractors to leave. We could now see a similar situation here. And this is only a taste of things to come when these rule changes are extended to the much larger private sector next year. 

“Ultimately, the off-payroll rules are so unclear even HMRC doesn’t understand them, as evidenced by its utterly atrocious record at recent tribunals. Treasury Ministers urgently need to pause and listen, rather than deciding on a policy then consulting.”

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