While the House of Lords select committee on PSCs concluded that the value of IR35 investigations was open to question, the government appears intent on maintaining the controversial rules. This response has prompted rapid condemnation from the PCG, the trade association for the UK’s professional contracting community.
The organisation’s senior public affairs manager, Andy Chamberlain, said that the PCG was “disappointed but not surprised” by the government’s response. He continued: “HMRC were asked by the committee to justify its figure of £550m as the total revenue protected by IR35. The calculation they have offered in this response is extremely crude and is based on a series of assumptions. Based on this response it must be assumed that HMRC have no idea how much revenue is protected by IR35, which is particularly alarming given that it uses this figure as the sole justification for keeping it in place.”
Mr Chamberlain claimed that the government had managed to “dodge the question” of the administrative costs of IR35 by arguing that no detailed figure was available, as outside staff were occasionally drafted in to assist HMRC’s specialist IR35 teams. Describing the answer as a “cop-out”, Mr Chamberlain said that the government should have insisted that the Revenue undertake a costing, as called for by the committee.
Mr Chamberlain welcomed the government’s acknowledgement of the positive contribution made by independent professionals to the UK economy.
A point Mr Chamberlain omitted to mention was that many choose to pursue professional contracting careers as Umbrella Company Employees, paying tax and NICs on a PAYE basis and remaining safely exempt from IR35 investigations.