What’s next for IR35

What's next for IR35

A bad week for IR35 reform, but can it be hailed a good week for contractors? James Poyser, CEO of inniAccounts, looks at the arguments

What’s next for IR35

You may have seen that this week ContractorCalculator published analysis of the responses to the IR35 consultation from 29 organisations. It’s pretty damning and indicates that in no uncertain terms extending the rules that the public sector follow to the private sector would have dramatic and damaging effect.

In the public sector, the consequences have been dire with highly skilled contractors leaving public sector contracts, putting projects in the lurch. It’s evident that Institute of Chartered Accountants in England and Wales, The Confederation of British Industry through to The Association of Independent Professionals and the Self Employed, all agree the same would happen in the private sector.

At this juncture in our economic and political history it would seem madness to put productivity and employment at risk. Organisations rely on skilled professionals to complete projects that don’t warrant a full time, long term employee. It’s how many are managing the turbulence of Brexit and how they would certainly manage a no-deal exit. And it’s not just the multi-nationals who need this skill, in many cases it is the only way start-ups can grow to become scale-ups. Our company is a case in point.

Years of frustration

With this in mind, it’s an understatement to say that changing IR35 rules has been an area of frustration for years, and we have to hope that the consultation will be acted on. It’s fair to say that everyone I speak to worries that this will be a case of hearing not listening, just as happened with the loan-charge consultation. It’s clear that if HMRC hasn’t got the answer it wants it’s prepared to ignore it – even if the feedback is unanimous. I know I’m not alone when I say that it would be detrimental to the country to plough on.

Contractors are not tax avoiders

I would urge Jesse Norman to take a fresh look in light of the analysis. Contractors are not tax avoiders, indeed it’s low down on the list of perks – our research shows that it’s a priority for just 12% of people. Instead they do it for project variety and choice, and work-life flexibility and as a result they contribute greatly in other ways, such as volunteering in the community, providing care to a loved one, through to making their own pension arrangements.

The findings set a clear case for abandoning the plans and reassessing what’s needed. It needs an open forum and in particular a review of the CEST tool that sits at the heart of it all. It’s far from fool proof and is causing more harm than good as it stands today.

I will continue to lend my support to Dave Chaplin, CEO of ContractorCalculator, as he continues to beat the drum. I will continue to lobby my MP and I will continue to use contractors and freelancers to grow my business as I believe it will otherwise become a case of do or die.

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