HMRC is not making many friends at the moment.
The latest wave of criticism has come from members of the Association of Professional Staffing Companies (APSCo), who have voiced their frustration at the lack of clarity and information around reforms to IR35 in the public sector at a recent meeting.
The changes – which any public sector contractor will likely know inside out, and centre around allowing recruitment firms and other engagers liability and responsibility for defining the employment status of Personal Service Company (PSC) contractors for tax purposes – have been met with widespread condemnation since their proposal.
The first walkouts took place last week, and could well be a sign of things to come.
At the APSCo meeting, one attendee lamented HMRC’s lack of communication on the matter, saying: “You have had a good 2-3 years to prevaricate and procrastinate on this issue. And yet we probably won’t have any real detail on the guidance until the March budget which gives us a matter of weeks to implement any changes.”
The meeting also saw questions raised regarding HMRC’s new digital tool and the likely departure of many skilled workers from the public sector due to the reforms. APSCo reported that HMRC wasn’t able to provide substantive answers to these questions.
“HMRC were unwilling to give any steer on their approach to the reforms following consultation,” said Tania Bowers, APSCo’s general counsel, who was at the meeting. “Our members were left frustrated at the number of fundamental issues on which they are still awaiting answers, not least how they will accurately determine firstly who is in scope, then the correct employment status of workers, a complex legal decision in itself and lastly calculate the correct tax computation. They are very concerned they will be left with no more than a matter of weeks to implement changes in spring 2017.”
Bowers added: “If these reforms go ahead, the cost to government for flexible labour will increase. The cost of the additional PAYE tax and National Insurance Contributions will either be passed on to the public sector end-client, along with other statutory costs or be borne by the contractor. Our members are telling us that skilled, independent contractors are likely to leave the public sector rather than see their rates reduce significantly, potentially leading to a talent drain from central government and the broader public sector just as the UK triggers Article 50.”