The leading tax specialists for contracting professionals, Qdos Contractor (part of the Qdos Group), has repeated its call for end engagers in the private sector to begin preparing now for the arrival of rebooted IR35 regulations.
The call comes after the recent publication of minutes from the last IR35 meeting, which was held in December last year. ContractorCalculator CEO and founder Dave Chaplin has carefully analysed the document and drawn attention to clear indications contained within it that the government is intent on introducing the controversial reforms to the private sector and may do so as early as April 2019.
Should the reformed rules hit the private sector, responsibility for determining a contracting professional’s IR35 status will, as in the public sector, be transferred from the freelancer to the engaging end client or paying recruiter.
The minutes explain that the government believes its recent public sector IR35 changes have increased compliance and that “possible next step would be to extend the reforms to the private sector.” As Mr Chaplin noted, this omits any references to clear instances in the public sector in which the reforms have actually increased non-compliance.
Referring to a document published by HMRC itself detailing multiple problems arising in the aftermath of the rushed imposition of new IR35 rules in the public sector – including increased rates of non-compliance and flaws in its online IR35 assessment tool CEST – Chaplin said that the Revenue was “simply turning a blind eye to all these issues in a bid to get more money into the government’s coffers.”
A key statement in the minutes is HMRC’s assertion that “there is an immediate Exchequer risk that needs to be addressed.”
Chaplin takes the view that the impending consultation on IR35 in the private sector is a cynical exercise, as the government appears already to have pre-empted its findings with a pre-existing determination to roll out the reforms come what may.
Qdos Contractor’s CEO, Seb Maley, emphasised that the minutes provide another strong hint that the government refuses to rule out further IR35 reforms, an omission that strengthens speculation that the changes could be imposed on the private sector possibly as early as April 2019.
Taking a more upbeat perspective about this eventuality, Mr Maley continued:
“Contrary to speculation, private sector engagers could manage reform – but work must start now if they are to be confident and ready to make well-informed IR35 decisions the time these predicted changes arrive.
“Given further reform looks increasingly likely, private sector engagers must communicate with the contractors they engage and ensure them they will be taking appropriate steps to make accurate IR35 decisions.”