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More 'unfeasibly high' inside IR35 status assessments
by Susie Hughes at 10:39 15/05/19 (News on IR35)
IR35 status assessments conducted by both the Met Office and the Crown Commercial Service (CCS) have delivered 'unfeasibly high' inside IR35 or 'deemed employee’ status for contractors since the introduction of the public sector 'Off-Payroll' rules.
And it seems that the Government's own 'online assessment tool' is contributing to these blanket assessments.

This is just the latest in a recent reports following Freedom of Information (FOI) requests from contracting authority, ContractorCalculator, which have shown many large users of contractors, including Network Rail, are imposing 'blanket-style' decisions on contractor status.

In the latest FOI request, the Met Office revealed that it deemed 98 per cent of contractors caught by IR35 following assessments carried out between April 2017 and January 2019. During the same period, the CCS determined 87 per cent of its contractors to be within scope of the rules.

When asked by ContractorCalculator, both public bodies denied holding any internal guidelines or policies relating to the Off-Payroll rules, instead claiming to use the relevant HMRC guidance which promotes the use of the Check Employment Status for Tax (CEST) tool.

'Wildly inconsistent'
Of 141 assessments conducted by the Met Office between April 2017 and January 2019, only three contractors were considered outside of IR35, compared with 138 who were found to be ‘deemed employees’. Meanwhile, the CCS passed just 13 contractors, failing 84.

The findings are wildly inconsistent with HMRC’s own estimations, that roughly a third of contractors should be found within scope of IR35, and join a host of dubious results at the hands of CEST:

  • HS2 determined 98 per cent of contractors to be caught by IR35 in 2018
  • Network Rail found 99 per cent of contractors within scope of IR35 in 2018
  • 92 per cent of BBC freelancers were deemed caught following the public sector reform.

Dave Chaplin of ContractorCalculator said: “It’s no coincidence that yet more public sector bodies, failing an absurdly high proportion of contractors, have acknowledged using CEST. HMRC has clearly fettered its discretion by releasing a tool that gives incorrect guidance, resulting in thousands of workers being wrongly classified and incorrectly taxed.

“HMRC appears to have taken it upon itself to override the law, having inflicted the biased CEST on the public sector, resulting in widespread non-compliance whereby genuinely self-employed workers are being told they are ‘deemed employees’.

“With CEST almost unanimously bundling contractors into ‘deemed employment’, public sector bodies will also be paying the new off-payroll tax of 14.3 per cent when they perhaps didn’t need to.

“CEST has been used to extort money from businesses and workers. It’s no wonder there are reports of the self-employed refusing to work in the public sector despite contract rates rising considerably.

“Laughably, HMRC claims that its work is about restoring fairness in the tax system. Since when is deliberately cheating and overriding the law considered fair?”

Further IR35 information
For more information about all aspects of IR35, including the controversial IR35 reforms see Shout99's News on IR35 section.

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Susie Hughes © Shout99 2019

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