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IR35 choice of words makes contractors fear the worst

IR35 choice of words makes contractors fear the worst

The latest in a long line of twists and turns around the prospect of IR35 reforms coming to the private sector has come, merely days after what was generally seen to be a positive spring statement for contractors. A debate has arisen around the choice of words used in relation to IR35, from the House of Lords.

Now, before we proceed and as a means of clarification, there’s nothing definite to suggest that the IR35 reforms and their implementation in the private sector is signed, sealed and soon to be delivered.

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A document recently released has led to suggestions that  reforms will soon become a reality. What has triggered this is the language used in the document and the way it has been written.

In a ‘Written Questions and Written Answers’ release from the House of Lords for the parliamentary debate that was held on Tuesday, 13th March, there is one section that explains what the government will publish over the coming months.

On the topic of off-payroll working, the statement reads: ‘A consultation on how to tackle non-compliance in the private sector, drawing on the experience of the public sector reform. The Government will work with businesses and individuals to mitigate the potential administrative burdens of any future changes.’

That last line in particular is what is causing grievance among the contractor community.

Contracting a burden

If working and proving that you are outside IR35 as a contractor is seen as a ‘burden’, rather than a necessity that allows contractors to earn more take home pay and capitalise on the other advantages of the way they work, then ‘mitigating’ it is likely hinting at removing it all together. Who would decide a contractor’s status in that scenario? The employer? Exactly as it is now in the public sector?

Granted, companies who employ contractors are likely to see the IR35 element as something of a burden. This is a burden they’ll want to avoid if the decision on IR35 status is left for them to decide. The result will most likely be blanket decisions.

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It depends on your approach to reading such literature produced by the government, and how reasonable and flexible you believe HMRC to be when it comes to this topic, as to how you interpret this statement. Confidence is low within the contracting community when it comes to IR35 and the government and HMRC.

HMRC need to release a clear plan of action and state its intentions. Until this is done speculation will be rife as to whether the reforms will be introduced to the private sector. As mentioned previously, there will be plenty of opposition to any move to do so.