In IR35

A leading tax advisory service for contracting professionals has repeated its call for the government to provide contractors designated as ‘inside IR35′ and so ’employed for tax purposes’ with full employment rights for the duration of their contracts.

Reviewing the succession of employment tribunal verdicts ruling that gig economy workers were not self-employed, as their engaging companies had claimed, but workers and therefore entitled to a range of employment rights. Amongst those rights include paid holiday, paid sick pay and the national minimum wage. Qdos Contractor blogger, Benedict Smith, agrees that these couriers and drivers had indeed been exploited and forced into bogus self-employment because that arrangement suited the employers financially.

Referring to the latest of these rulings, the Hermes case, Smith writes: “Employment status decisions must be collaborative, and an engager should not be able to use its weight, reputation or position of power to make a decision that only suits them. If anything, the Hermes case makes the case for joined-up thinking even more prevalent.”

He restates Qdos Contractor’s insistence that genuinely self-employed people, such as high-end, well-remunerated contracting professionals must not be conflated with more precariously engaged, lower-paid gig workers. The latter is in need of employment protections while the former are clear that they do not wish these rights: they want a more accurate setting of IR35 status in the wake of the chaos and confusion following the public sector reform.

Conceding that employment status for employment law and tax are distinct and should not impact each other, Smith nonetheless highlights the legal ambiguity around the true employment status of genuinely self-employed contracting professionals – a lack of clarity that is bound to confuse inexperienced public sector engagers with little understanding of the case law upon which the distinction is based as they struggle to make IR35 determinations.

Smith re-emphasises the injustice faced by contractors designated as inside IR35: they must pay full employee income tax and NICs without receiving the statutory rights and benefits these taxes are intended to fund. He writes: “If the Government truly wants to create a ‘fairer’ tax system – which is incidentally a word used to justify recent IR35 changes – then they must offer employment rights to those working as ‘employed for tax purposes.” In a recent survey by Qdos, 89% of the contracting professionals polled agreed.

The Hermes ruling is the latest example in a long succession of cases that highlight the need for government to recognise the sheer diversity of composition in the UK’s ‘melting-pot’ of 4.8 million independent workers, who have ‘vastly different priorities,’ Smith concludes.

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