Conservative Government IR35 Review
The promised Conservative Government IR35 review was announced yesterday. Sajid Javid promised a review of the coming IR35 changes if the Conservatives were re-elected.
This was just after Labour, the Lib Dems and SNP had promised an IR35 review.
Contractor Questions on Conservative Government IR35 Review
- What happened with the last Conservative Government IR35 Review?
- What will this IR35 review entail?
- How many contractors do the Government think are IR35 compliant?
- Could contractors get the Blanket banning of PSC contractors stopped?
- Are companies allowed to blanket assess contractors?
- How many contractors pass HMRC’s IR35 test?
- What is Contractors only hope from the Conservative Government IR35 Review?
- What will happen to contracting if PSC blanket banning is not stopped?
What happened with the last Conservative Government IR35 Review
This review looks as if it will be just as big a stitch up as the review promised by Cameron and Osborne in 2010. They told contractors leaders verbally prior to that election that they would abolish IR35 if elected.
However, in their manifesto it just said that they would ‘look at’ IR35 again. A delighted IPSE rushed out a Press release just prior to the election.
Well, they did review IR35 again and decided to keep it.
They even went further and said they would strengthen IR35 and have been doing so ever since.
What will this IR35 review entail
So, what does this Conservative Government IR35 review entail?
Well, according to Treasury Minister Jesse Norman, “We recognise that concerns have been raised about the forthcoming reforms to the off-payroll working rules.
“The purpose of this consultation is to make sure that the implementation of these changes in April is as smooth as possible.”
So, they’ve predetermined the result. All the review is for is to decide the best and smoothest way to implement the IR35 changes.
How many contractors do the Government think are IR35 compliant
Jesse Norman said just a few months back, in answer to an IR35 question in Parliament, that here was “only 10% compliance in this area”.
The Government say that the review will be an independent one. It was last time in 2010 too.
However, the brief it has is only to find out how best to implement the Conservative Government IR35 changes. They will not have the opportunity to say they should be scrapped.
So much for the promised independent review of IR35. They are not reviewing IR35 or the IR35 changes in the private sector at all. They just want advice on how they can implement the IR35 changes as smoothly as possible.
Could contractors get the Blanket banning of PSC contractors stopped
Probably the best that contractors can hope for is to stop companies blanket banning contractors who use personal service companies.
Instead of making contractors sit HMRC’s IR35 test, many of our top companies are declaring all their roles are inside Ir35 – even if the contractor can pass the test showing him or her to be outside IR35.
Other companies are testing their contractors after telling them that they will all fail beforehand. Some companies are giving reasons for their contractors failing the IR35 test that ave already been rejected by judges at employment tribunals.
Are companies allowed to blanket assess contractors
Companies are not allowed to blanket assess contractors, i.e. assess them all together.
However, they are allowed to blanket ban contractors using PSCs.
It was probably never intended that companies should ban all PSC contractors by making all their roles inside IR35.
Perhaps this is an area where contractors can get the Government to change and close this ‘loophole’.
How many contractors pass HMRC’s IR35 test
There have been close to a million tested via HMRC’s Check Employment Status for Tax (CEST) IR35 test.
54% of those tested are outside IR35. 31% are inside IR35. 15% are indeterminable.
So, even HMRC’s IR35 test shows more than half of contractors to be outside IR35.
However, both Jesse Norman and HMRC ave said that there is only 10% compliance in this area.
So, even if it was not intended that companies would make all their roles inside IR35, both Jesse Norman and HMRC would probably see this as an unintended side benefit.
What is Contractors Only hope from the Conservative Government IR35 Review
The only hope would be that Sajid Javid would override them. He said, when he was Managing Director at Deutsche Bank that the government should “repeal the silly IR35 tax”.
That’s not going to happen However, if contractors representatives can show the potential damage to the UK economy caused by the massive disruption that will be caused to most of our major companies through blanket banning of PSC contractors then there is the possibility that not only will blanket assessments of contractors be banned but blanket banning of outside IR35 roles be banned as well.
It is contractors only hope.
What will happen to contracting if PSC blanket banning is not stopped
If blanket banning is stopped then a two-tier contractor market can evolve as it has in the USA,
If blanket banning is not stopped then I’m afraid that contracting in the UK is finished. It will not recover from this. Virtually all contractors will be PAYE.
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