Qdos Contractor, the tax advisory service for contracting professionals, has emphasised that the absence of any reference to IR35 in the draft Finance Bill 2018-19 does not mean that plans to roll out the rules to the private sector have been suspended.
The draft has just been published ahead of the November Budget and although it contains no reference to IR35, Qdos is of the view that “the reform is for all intents and purposes already done”, making a 2020 rollout more likely than a 2019 implementation.
Citing HMRC’s insistence that the reforms in the public sector have worked. Alongside their somewhat arrogantly dismissive response to all evidence that they haven’t, as merely “anecdotal”, the statement’s author Ms Hardy advances the view that the Revenue may be secretly aware that they require more time to accurately assess the true impact of the new rules on the public sector. It is, she writes, unlikely that senior Revenue officials predicted the devasting effects the reforms actually did have, as evidenced by the recent BBC pay debacle and the serious disruptions caused in the NHS and elsewhere.
Hardy lays the blame for HMRC’s failure to anticipate the unintended negative consequences of their reforms squarely at their own door, as they have demonstrated an obstinate refusal to listen to external industry expert input.
When the IR35 Forum was set up in 2013 to assist in improving the administration of IR35, the Tax Director of the newly formed Office of Tax Simplification, John Whiting, said that the way forward rested on the Revenue, the Treasury, business representatives and small business advisers collaborating.
Yet an original Forum member, David Ramsden of the Federation of Small Businesses (FSB), said that his experience led him to conclude that for HMRC, it was solely a box ticking exercise, adding: “It would not be if HMRC took any notice of what the external members of the Forum had to say.”
The Revenue has adopted a similar stance toward criticisms of its failure to include Mutuality of Obligation in its CEST tool.
HMRC was heavily criticised by a Select Committee in 2014 for its failure to provide accurate costing for the compliance and administrative work arising from IR35 reforms. Currently, HMRC is claiming that the costs of non-compliance in the private sector will total £1.2 billion by 2022/23, but again data supporting this calculation has not been forthcoming.
Hardy concludes: “The irony of HMRC not being able to provide accurate costs relating to their compliance activity will not be lost by most. In comparison to HMRC’s estimated £1.2 billion, one wonders how much money HMRC have already wasted on their quest for a solution.”