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Concerns about false rumours of change to IR35 public sector rules

by Susie Hughes at 13:02 24/02/17 (News on IR35)

Confusion and misinformation is causing concern among the contractor community as they prepare to work within the new rules governing contractors in the public sector which come into force in April.

There is much concern about the new public sector IR35 rules for a host of reasons. (For more information, see: News on IR35). One such reason is that where an agency or third party is to be the fee payer, there is no provision for the hirer to be liable if the fee payer relies upon the hirer’s conclusion that IR35 does not apply, and pays the contractor on a gross basis. Theresa Mimnagh, from recruitment specialist law firm, Lawspeed, said: “Under the rules published on December 5 2016, there is no defence for an agency that it relied upon the public sector hirer’s advice that IR35 does not apply. Advertisement “If HMRC later claims that IR35 did apply to the arrangement and that employer and employee NICs and PAYE are therefore owed to HMRC, the agency would still be liable unless the agency can show itself that IR35 did not apply. This requires evidence over and above the hirer’s conclusion. The rule here therefore is that the agency cannot rely on the hirer’s determination in itself, which seems very unfair given that HMRC has consistently said that it is the public sector hirer who should determine the IR35 status.” This point has been raised with HMRC by various representatives, including the Association of Recruitment Consultancies (ARC). Ms Mimnagh said: “A defence should be provided to agencies in these circumstances but we have been given no indication that this has been taken on board”. Scotching rumours Now ARC has been informed by several sources that various public sector bodies believe that they are to be sole arbiter of contractors’ IR35 status, with liability to follow, meaning that the legislation is to be changed and agencies will then need to follow whatever conclusion their hirer gives on the IR35 status of any contractor supplied to it. Scotching the rumours about changes to liability, Ms Mimnagh said: “They are not correct. This is nothing more than speculation, and agencies should be careful to discount it. There is a great deal of misinformation and indeed misunderstanding about the new rules and how they will apply. We have asked HMRC directly whether there is to be any change to the draft legislation as published in December 2016 whether on the liability or the defence point or at all. "The answer was a categorical 'no change at all'. The conclusion therefore is that some public sector hirers themselves may not understand the rules, and that agencies should be careful not to be misled by their view." Tweet -- If you wish to comment on this article, please log in and use the Reply button below. Registering is free and easy - see 'Join Shout99'. - Susie Hughes © Shout99 2017

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