The Treasury recently hinted that the controversial changes to the IR35 legislation which affect contractors in the public sector would be increased. (see: Treasury speculates on extending new IR35 rules to private sector - Shout99, Oct 2017)
Mel Stride, Financial Secretary to the Treasury told The Financial Times there was 'an issue of fairness' when questioned whether private sector contractors should be subject to the same rules as those working on public sector contracts.
Seb Maley, CEO of Qdos Contractor said: "If private sector reform is, in Mel Stride's own words Ďan issue of fairness', then out of fairness our sector deserves to know the Treasury's plans for the future of IR35 sooner rather than later. We all know what happened when public sector changes were introduced in April following years of uncertainty.
"While further reform is ill-advised, it can in fact be managed. But the Government must learn from its mistakes. The Chancellor has an opportunity to shed much needed light on plans for IR35, which we urge him to address in the upcoming Budget."
Mr Stride's comments follow his claim that the public sector reform - introduced in April - has increased compliance in the sector. In Parliament, he explained: "Early analysis of tax receipts between April and June shows that around 90,000 additional new engagements occurred in the public sector above the level that would normally be expected. This indicates more individuals are being taxed as employees since the reforms, and is consistent with the Government's expectations that the reforms would increase tax compliance in the public sector."
Seb Maley said: "That 90,000 contractors are now working inside IR35 in the public sector following reform does not necessarily indicate increased compliance. As a result of changes, numerous public engagers made blanket IR35 decisions to safeguard themselves. And let's not forget that the very tool HMRC provided to set employment status is fundamentally flawed and in some cases provides inaccurate determinations.
"IR35 is a complex and ambiguous legislation. Working practices must be reviewed individually and on a case-by-case basis, by unbiased and experienced specialists. It's concerning that a largely untrusted digital tool has been used some 450,000 times to help set IR35 status."
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Susie Hughes © Shout99 2017