On April 6, 2017, public sector companies will be handed responsibility for setting the IR35 status of contractors they engage – a controversial move which could see contractors caught wrongly inside IR35, and recruitment agencies then liable for any missing tax.
After testing and running different scenarios through the ESS Tool, freelancer specialists Qdos Contractor has questioned its accuracy - particularly around the definition of genuine substitution, along with highlighting the long-term impact it may have on contracting and hiring.
Substitution
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“The consequences of mistakenly placing a contractor inside or outside IR35 are huge for all concerned. 85 per cent of contractors plan to leave the public sector if they are placed inside IR35 by their public sector engager, while recruitment agencies will be left to pick up the bill for any missing tax.
“IR35 is a complex issue. It takes expertise and the ability to look at each case individually to be confident of an accurate decision. It’s hard to see how one-size-fits-all approach like this can be completely reliable.
“With little time until changes to IR35 in the public sector are enforced, it’s concerning that HMRC’s new tool has only just been released. Changes are imminent, and there isn’t much time to iron out any teething problems.”
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Susie Hughes © Shout99 2017
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