In HMRC

The government has finally published its long-awaited consultation on off-payroll working in the private sector – and immediately met with words of stern caution from Britain’s largest trade association for Umbrella Companies, the Freelancer and Contractor Services Association (FCSA).

Referring to HMRC’s handling of the reforms in the public sector as “dismal,” FCSA CEO Julia Kermode said that it was “unthinkable” that the government could seriously expect end-engagers to preside over accurate management of IR35 when HMRC have shown that they cannot implement it adequately themselves.

She added:

“The reforms in the public sector have had a devastating impact as has been widely reported.  HMRC has failed to communicate effectively with 50,000 public sector bodies so to roll the reforms out to 5.5m private businesses in the UK will require a massive upscaling of current policy implementation which HMRC is simply not equipped to do.”

HMRC, she observed, was already over-stretched and it is now clear the public sector changes were too often handled improperly.

Kermode criticised the government for introducing tax policy changes in recent times that disproportionately impacted the contingent workforce and the companies that support them, leaving them financially poorer and underappreciated by a government that claims to understand the economic importance of the flexible workforce.

Describing these contracting workers and the businesses supporting them as the “financial backbone” of Britain’s economy, she described any attempt to impose these reforms upon them as “malicious and wrong.”

However, she also noted that the consultation includes alternative proposals to a simple replication of public sector IR35 reforms. These include requiring or encouraging businesses to secure their supply chains and additional record-keeping requirements, both of which are in accord with the government’s recently issued Labour Market Strategy.

Still, Kermode reasserted the FCSA’s disagreement with HMRC’s view that public sector compliance had improved as a result of the reforms, adding, “… all that we have seen is an increase in numbers on payroll, which is not substantive proof that they should be there at all and simply put there under inaccurate blanket or role-based decisions made by their engagers.”

She voiced serious concern over the timescale of the consultation, which suggested that reforms could still be introduced as early as April 2019, despite the debacle of the public sector experience when the rebooted regulations were imposed so hurriedly that end-clients and intermediaries such as recruitment firms had insufficient time to prepare for them properly.

Kermode concluded by expressing the FCSA’s hope that “common sense prevails” to ensure any changes are properly planned and do not compromise the economy during the crucial process of withdrawing from the EU.

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