Autumn Statement hopes and wishes- by John Thorburn
There has been much written already on the proposed reform of the intermediaries legislation (“IR35”) for those off payroll workers in the public sector, unsurprisingly most of which is not in favour, focussing on the impractical nature of the proposal and the inevitable fall out; skill shortages, contract rate uncertainty, lack of employment rights and potential false employment.
Whilst the tide of opinion from professional bodies, agencies, freelancers and government advisors (The Office of Tax Simplification) swells for the abandonment, or at least postponement, of the proposed April 2017 implementation, HMRC appear to be marching on unfazed, armed with their lone opinion of 90% non-compliance; even after congratulating themselves on the success of their public sector ‘paying the right tax’ assurance scheme.
There is no doubt that the common goal we would all like to achieve is a simplified set of rules for “IR35” to make the decision on status much easier to establish, which in turn can only help with the issue of compliance.
So the question to ask is ‘Does creating a simple tool for one person to use to diagnose a response for a current complex tax law, only to then apply it to someone else, to calculate and pay their tax bill , help with this common simplified goal?’
After 16 years of trying to assess “IR35” based on employment status case law and opinions, now would appear to be the right time to establish key principles that all parties in the supply chain can play by. Perhaps even turn the focus of “IR35” to establishing trading activity, rather than employment, by going back to basics and considering the badges of trade.
So, fingers crossed for the autumn statement. Rather than Frankenstein adding to the monster he has already created, let’s hope HMRC takes a deep breath, has a moment of clarity, actually listens to reason and focuses on changing the root of the problem and create a clear new set of IR35 principles to comply with.