Qdos Contractor, the tax advisory and support service for contracting professionals, has urged the government to rethink its approach to IR35 and the negative effect it is having on the country’s two million independent workers, if it is to stand any chance of recouping their fast-dwindling support in 2018.
Previous research from Qdos revealed that independent workers currently have little trust in the government in the aftermath of the rushed public-sector implementation of controversial new IR35 reforms and recently-announced proposals to roll it out to the private sector. Of the contractors surveyed:
- 95% thought the government was curtailing the benefits of self-employment
- 97% do not think the government has their best interests at heart
- 63% want the government to prioritise developing a fairer taxation system
Qdos Contractor Chief Executive Seb Maley called on the government to review IR35 this year, an initiative that might outline its commitment to independent contracting professionals. Describing the relationship between contractors and government as “fractured” and in need of repair, he called on the government to build a fairer tax system and, more specifically, to rethink its stance on IR35.
He identified a series of areas for government to attend to:
Keeping an open mind during the forthcoming IR35 consultation
The government’s promise to consult on IR35 reform in 2018 will be meaningless unless it maintains an open mind and candidly assesses how these regulations currently impact contractors, Maley said, adding:
“The Government must actually consult with UK businesses and the contracting community before any further reform is announced. An open dialogue with the people that IR35 reform impacts is essential, while ruling out further changes entirely would go some way to convincing contractors that this Government is a supportive one.”
HMRC must adopt “considered approach” to IR35 investigations
Maley noted the opacity surrounding the Revenue’s IR35 investigations in the light of the new reforms in the public sector. While no one expected them to disclose a detailed strategy, contractors would become more confident if they were assured that case law was the bedrock of any argument.
NHS must make properly-informed IR35 decisions
The NHS responded to IR35 reforms last year with blanket determinations that forced all its contract and locum staff inside IR35. While this has now been reversed, some contractors have not yet had their working arrangement individually reviewed. Case-by-case IR35 assessments are essential, and government must stress this.
Review HMRC’s CEST tool
Due to its demonstrable inaccuracy, the government must review this obviously flawed online tool’s effectiveness, as a substantial number of the 450,000 determinations made by it last year may well not stand up in court.