IR35 in the Private Sector Back on the Agenda

IR35, Private Sector, Project Management

Project management contractors and those looking to move into this rewarding space are hopefully aware that the Off-Payroll working (in the Private sector) consultation has finally commenced. HMRC last week released the consultation paper and have started setting up face to face reviews to gather feedback on this divisive subject.

By way of a re-cap, the Off-Payroll worker regulations were changed last year (April 2016) using the Public Sector as a test bed to bring in new ways of increasing the tax take for HMRC. The change means that those “workers” classified as inside the regulations must have employers and employee National Insurance Contributions, as well as PAYE deducted at source. On the other hand “workers” classified as outside the regulations are free to continue operating as a “business” and allowed to manage their own affairs.

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There has been much discussion and finger-pointing from all the parties with vested interests about the success or failure of the implementation, including;

  • New compliance issues around loan schemes introduced by some Umbrella companies
  • Workers being forced to use nominated Umbrella companies when deemed as inside
  • The way the CEST (Check Employment Status for Tax) tool has been constructed and works
  • Organisations implementing blanket decisions that ALL workers are inside
  • The success at reducing non-compliance and increasing tax contributions
  • The lack of impact on the public sector being able to hire workers

IR35 in the Private SectorSo now we have a new discussion about how this or another approach (seems highly unlikely?) could be implemented in the Private Sector to “level the playing field” and further eradicate non-compliance.

You have an opportunity to respond and the consultation materials can be found on the web. There is also a factsheet which is worth a read even if you are not going to respond to the consultation.

As expected there are also the opposing views, an example being the factsheet from Contractor Calculator and the usual lobby your MP activities from groups such as the IPSE and APSCO.

This will not be an easy process and the underlying feeling will be that HMRC will push ahead regardless of the consultation as they have their eye on the cash! However we should not use that as an excuse not to get involved, the last consultation did make some changes to the original proposals for the Public sector implementation so it is worth the effort.

As such I will be attending a session with the HMRC next week and would welcome the thoughts of our readers regarding the Public sector implementation and any you may have about a roll out into the Private sector. Drop me a line via the contact page.

Our last report on IR35 and its impact in the Project Management Domain can be found here.


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