Last week saw the Treasury publish a ‘Factsheet for Contractors’ on its website, leaving many to question what useful purpose the document served. While the government have said thy will release more guidance for contractors on the coming IR35 reforms, the factsheet wasn’t even published on HMRC’s website, meaning that many people looking for IR35 updates wouldn’t have seen it.
Representatives of the contracting sector are also questioning the timing of a ‘factsheet’ given that the Off-Payroll Review is due to conclude in March. While the document contains nothing new, neither does it offer clarification on issues of concern. In fact, many commentators feel that the vague wording only serves to further muddy the water on this complex issue.
Yet again, the line that ‘the changes do not affect the self-employed’ is used, with no acknowledgement of the current PSC ban that’s forcing many genuine contractors onto the payroll at reduced rates of pay. This situation also contradicts the document’s claim that contractors don’t need to take any action before April unless they think they’re affected, in which case they’re advised to seek a Status Determination Statement (SDS) ‘from their hirer.’
In fact, a high proportion of end-clients aren’t aware of the reform. In many instances, it’s down to contractors to initiate conversations and educate their engagers about the legislation. Asking engagers for a SDS is problematic when a large proportion don’t actually know what one is. Agencies are also concerned that the word ‘hirer’ doesn’t make it clear that the SDS is the responsibility of the end-client.
The document does little to address other concerns. On the matter of retrospective investigations, HMRC’s line that they won’t take action ‘unless there is reason to suspect fraud or criminal activity’ leaves them a wide margin of subjectivity. On the question of contractors employment rights under IR35, it simply states that contractors won’t be entitled to statutory benefits unless they have a direct contract of employment.
Given the ambiguous nature of the document, contractor representatives are asking where the response to the draft legislation is and why it hasn’t been published ahead of the review. The response should have been released in the autumn budget; since this was only delayed because of the election, it’s likely that it’s available – so where is it?
Without the response to the consultation on the draft legislation, an IR35 Review can’t hope to adequately address documented concerns. Given that the review isn’t independent and its roundtables are by invitation only, this doesn’t suggest that it will accurately represent the views of stakeholders. One stakeholder commented that, even if chosen, he’d be contributing to the review blind:
‘If the response to the consultation had been published then we would all have something to review to tell the review. Yet, there’s no document, no guidance, not an even an inbox to send views to. The ‘Small Company’ exemption and ‘Reasonable Care’ are two points HMT vowed to clarify, but it hasn’t.’
Concerns are also being expressed about Chancellor Javid’s grasp of IR35 legislation given the imprecise nature of some of his comments. One tax expert speculated off the record: ‘Given the lack of clear, practical and definitive information from HMRC, which might indeed be cleared up if the government’s response to the IR35 legislative draft was published, more and more engagers will panic and simply ban PSCs. One wonders if that was HMRC’s intention all along.’
This content has been supplied by IR35 Guru.
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