Will Sajid Javid Revoke IR35? He Orders Total Review of HMRC Tax Policy

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Sajid Javid Revoke IR35
Sajid Javid Revoke IR35

Sajid Javid Revoke IR35

Will Sajid Javid revoke IR35? A decade ago Sajid Javid called for the “repeal of the silly IR35 tax”. When he didn’t mention it in his Autumn statement cynical contractors were not surprised. However, he has now ordered a complete review of how HMRC has conducted its tax avoidance campaign against contractors since 2016. This was triggered by the loan charge problem.

Contractor Questions on the Sajid Javid Revoke IR35 Theme

  • Will the Independent Inquiry of HMRC Include IR35?
  • Does Sajid Javid Understand Contractors and the Flexible Workforce
  • Is Sajid Javid’s Decision to set up an Independent Inquiry into HMRC a Surprise?
  • Will Sajid Javid Revoke IR35 really?

Will the Independent Inquiry of HMRC Include IR35

Treasury papers show that the Chancellor is widening this to examine the way that HMRC has conducted the whole campaign against freelance tax avoidance since 2016. So it’s not just about the Loan Charge.

This seems to suggest that the independent inquiry will examine IR35 too. If this is a correct interpretation then this covers the period when the Government and HMRC rolled out the IR35 reforms in the public sector. That took place in April 2017.

It may also cover the looming IR35 reforms in the private sector too. These changes are due in April 2020.

Does Sajid Javid Understand Contractors and the Flexible Workforce

Sajid Javid understands contractors and how they contribute to the flexible workforce very well. He worked his way up to become Managing Director of Deutsche Bank. Deutsche were avid users of contractors in his time there and since.

Indeed it was when he had left Duetsche Bank and just before he started his political career that he made the statement that the Government should “repeal the silly IR35 tax”.

Is Sajid Javid’s Decision to Set Up an Independent Inquiry on HMRC a Surprise

The press are saying that his decision to set up an independent inquiry is a surprise. However, it is not such a surprise if you know his background and what he said about IR35 in the past.

He has appointed Sir Amyas Morse to lead an inquiry into all HMRC’s actions on contractors’ supposed tax avoidance since 2016.

I may be misinterpreting this and it may just be just about the loan charge. However, I don’t think I am. It could have said that hey were just investigating the loan charge. However, they didn’t. The Treasury papers said that they would look at the ways that HMRC conducted the whole campaign against freelance tax avoidance since 2016. That is the period just before the public sector IR35 reforms.

That surely has to include the IR35 reforms both in the public sector and the private sector. We await further clarification. I hope contractors group IPSE pushes them for further clarification.

Will Sajid Javid Revoke IR35 Really

I know many contractors will take this with a pinch of salt. However, there is now some hope that HMRC will be reined in a bit.

It could also recommend that the private sector IR35 changes should be examined at greater length.

Or it could recommend that the Government “repeal the silly IR35 tax” that Sajid Javid called for all those years ago.

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2 COMMENTS

  1. Whilst you may well have good intentions concerning contractors that entered some “disguised remuneration” schemes.

    HMRC stance was always pushed along by the 20,000 plus Directors/Sole Traders that used these schemes to extract vast amounts of income with no tax or NI paid. One high profile Director took £17.9M in just one year.

    None of these Directors/Sole Traders who entered Remuneration Trust/EBT schemes were forced to join these schemes, there was one clear objective, and that was to avoid tax, NI, employers NI etc.

    However, as you have expressed there are many thousands of Contractors now caught up and placed in the same pot as these tax avoidance scheme users.

    One of the problems here, was HMRC being lazy, by bringing in a one size fits all Loan Charge, that is retrospective, purely because their own Enquiry team missed the boat with 15-20% of D.R clients.

    Even if they cancel the loan charge, they will still look to challenge scheme users through the Courts. You will not be out of the woods. The only winners, will be scheme users who disclosed their entry correctly, but didn’t receive a valid enquiry notice in time.

    We deal with enquiry notice disputes on a daily basis, if a procedural error is found this can invalidate the original enquiry or the use of ”Discovery” powers.

    Every historical tax planning scheme member first port of call should be to check for HMRC procedural errors. This can be done for a small review fee, or via their accountant if they are up to speed with legislation.

    If a procedural error is found, clients should look for a tax specialist, for the avoidance of doubt you do NOT need a QC Solicitor to challenge HMRC at the First Tier Tribunal, if you have a good enough case, a tax specialist should look to engage under a No win No fee basis.

  2. You are either employed by someone – and get all the employment rights OR you arent, simple as that really .
    It is illogical to say that for tax purposes we will treat you as employed BUT for employment reasons you will be treated as if self employed / independent contractor.
    I work as a freelance IT specialist – I usually have a number of small projects that I work on mainly in the field of social media management / monitoring (awario) as well as eCommerce projects. There are lots of others like me in the ‘gig’ economy making things tick for SMEs all over the UK – dont kill it – let it find it’s own way.

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