In IR35

The Recruitment and Employment Confederation has stepped in to the ongoing debate about the future of IR35, arguing that HMRC’s focus should now be on detecting the very small number of genuine examples of disguised employment in the UK rather than assuming that all freelance contractors are potentially subject to the rules.

Jeff Brooks, who chairs the REC’s Technology Group, underlined the importance of finding ways and means of focussing the system “on the rare cases of actual disguised employment.” It was essential, he added, to “make sure that the vast majority of contractors who have done nothing wrong don’t have to worry about being subject to HMRC investigation or tribunal that could last years.”

The REC is one of several prominent groups to be invited to join the newly created IR35 Forum, which was set up after Chancellor George Osborne’s budget decision in March to retain the controversial legislation but improve the efficiency of HMRC’s implementation of the rules. IR35 was introduced by the previous Labour government and was designed to prevent unfair tax advantages by employees switching to questionable “self-employed” status (e.g., returning to the same company and doing the same work under a supposed self-employed contract).

Mr Brooks insisted that IR35 rules have to date been counterproductively complex, with the result that they have generated a great deal of unnecessary uncertainty and made the system “unacceptable to contractors and the recruiters who find them work.” Moreover, this complexity and ambiguity has also wasted “countless hours of tax officials’ time.” It was, he said, in the best interests of all parties to find a more rapid and more efficient way of stamping out the few real instances of fake self-employment.

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