Following news that a consultation will take place on extending the off-payroll IR35 rules to the private sector, Paul Gough asks whether this is just putting off the inevitable, or is the Chancellor going to take a proper look at the good, the bad and the ugly of the public sector IR35 situation?
“The Autumn Budget heralded a welcome period of reflection for those contractors concerned that poorly thought-out IR35 legislative updates in the public sector might be rolled out more widely welcomed the news that Philip Hammond has announced a consultation period before making any changes to the private sector.
From a business at the coalface of IR35, advising private and public sector contractors on a daily basis, here are the real learnings from the public sector roll-out that we think should be considered:
The good
- Some vulnerable workers now have more protection against domineering engagers
- Some workers have stronger employment rights and more predictability of income than before
- Some Intermediaries providing tax avoidance models for the engagement of workers have been shamed and closed down
The bad
- Many workers have seen their take-home pay reduce by more than 25% as they are forced to wear the burden of employer’s national insurance contributions
- Some workers and engagers have lost elements of flexibility in when and how they work together.
- Vacancies and a need to replace contractors have caused a drop in productivity
The Ugly
- Some engagers panicked and applied blanket assumptions to status, creating a breed of “falsely” employed workers
- Many legitimate users of personal service companies have been incorrectly labelled and treated as tax avoiders
- The Treasury and HMRC have convinced themselves it has been a success
As chairman of the FCSA and MD of Intouch Accounting, which specialises in accounting for contractors, I’m extending an open invitation to Mr Hammond to meet me and some of our clients for a consultation with those in the know.”
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