More experts from the staffing industry and groups representing contracting professionals have been giving their verdicts on the confirmation in last week’s autumn budget that the government is indeed considering extending controversial new IR35 rules from the public sector to the private sector.
The wording of the confirmation was, however, tentative. It referred to the extension as “a possible next step.” A new consultation on how to tackle “non-compliance in the private sector” was announced, along with a commitment to draw on the experience of the reforms in the public sector.
Julia Kermode, CEO of Umbrella Company trade association the Freelancer and Contractor Services Association (FCSA) told Recruiter magazine that she had “always been concerned” that there would be major practical difficulties in scaling up the public sector rules in the private sector, which is estimated to contain a staggering 5.5 million private enterprises.
Nevertheless, she believes that it is “only a matter of time” before these challenges emerge. She expressed a degree of hope that the government was prepared to listen to outside input, since it had decided not to press ahead with an early roll-out and was instead inviting stakeholders to participate in a consultation.
Dave Chaplin, CEO and founder of the online support and information portal for contractors, ContractorCalculator, however, was less optimistic. Declaring his belief that, despite the delay, the government had already made up its mind, he told Recruiter that “the recommendations already look predetermined” even though a consultation had been promised.
Crawford Taylor, CEO of the campaigning Umbrella Company trade body PRISM, said that his organisation would be pushing for a strategic review of the tax system so that it came into alignment with findings contained in Matthew Taylor’s study of “good work” in the UK.
Meanwhile, referring to plunging employer confidence levels recorded in the latest JobsOutlook report from the Recruitment and Employment Confederation, REC Chief Executive Kevin Green said that businesses did not want any further taxation changes such as IR35, which would exacerbate existing difficulties in attracting and retaining talent and increase administration costs. However, he welcomed the government’s decision to examine IR35’s impact on the public sector and avoid a rushed implementation.
EY’s tax policy leader, Chris Sanger, told Recruiter:
“With 18 months before the new rules apply, this is going to raise many questions about how the contractor market will operate in the future. The measure may not be intended to go beyond disguised employment, but the challenge will be to deliver a regime that doesn’t undermine the UK’s digital future by deterring contractors and others who will play an important role in our new economy.”