In IR35

The Association of Independent Professionals and the Self Employed (IPSE) and the Recruitment and Employment Confederation (REC) have published the main points that they will be submitting to the government in the current consultation on IR35 and the private sector.

Drawing on feedback from contracting professionals, IPSE noted the following key points:

  • IR35 remains immensely complicated and accurate determinations are virtually impossible without expert knowledge of the case law upon which it is based. HMRC’s flawed and inaccurate CEST tool simply makes things worse. If HMRC and their online tool can’t get determinations right, how are private enterprises across Britain meant to?
  • The government’s desire to extend the reforms is based on a false premise: that they worked in the public sector. Recent research by IPSE and the CIPD found that the opposite is the case. To avoid falling foul of HMRC and with insufficient time to prepare for the changes, many public sector bodies simply imposed blanket determinations of their contracting professionals, driving many of them out of the public sector altogether.
  • It would be bad at any time to extend these “disastrous” changes to the private sector, but, as IPSE’s Press and Public Affairs Officer, Tristan Grove, puts it: “doing so when business is already dealing with the looming uncertainty of Brexit is sheer madness”.
  • Given that productivity has been plummeting for some time in Britain, hampering businesses with the reams of red tape associated with administering IR35 will almost certainly worsen this considerably.
  • The continued confusion over employment status should be directly addressed. Taxing self-employed independent contracting professionals as though they were employees yet failing to grant them the employment rights these levies are intended to fund is immoral and makes the confusion worse. Before considering extending IR35, the government should await the outcome of its own ongoing consultation on employment status.

For its part, the REC’s submission, based on feedback from member recruiters, is forthright. The Confederation’s Stakeholder Engagement Manager Karen O’Reilly writes: “to proceed with rushed reforms to IR35 in April 2019 would create upheaval in the private sector and risks damaging the flexibility of the labour market”.

The imposition of IR35 on the public sector last year resulted in new and complex problems which have not been resolved. Instead, the REC calls on the government to conduct a full post-implementation review of the effects of the reforms on the public sector and an impact assessment for the private sector to ensure that the real issues are properly captured.

At the very least, the government must acknowledge the diverse range of business models across the private economy and “ensure businesses have sufficient time and resources to adapt”.

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