The Treasury Select Committee has elected to publish a critique of the controversial new IR35 rules for the public sector.
Created by the Association of Recruitment Consultancies (ARC), the critical letter had previously been sent to all MPs and outlined the association’s dissatisfaction with the reforms made to IR35 in the public sector, which have already had major ramifications.
The Treasury Select Committee is set to now publish the letter as evidence, and will form part of a specific focus on controversial aspects of the government’s Finance Bill 2017.
“Our intention as we reported in March was to ensure that MPs recognised the problems we identified, not only in relation to the new online tool but also in respect of some fundamental points of principle” said Adrian Marlowe, chairman of ARC. “The approach taken by HMRC and the Treasury in taxing self employed contractors in the way set out, increasing tax levels, imposing administrative and cost burdens on already hard pressed public authorities, confusing employment income with company invoices, and introducing consequent VAT anomalies, is not the correct way to address IR35 tax avoidance perceived by HMRC or public sector off payroll arrangements.”
ARC has asked MPs to seek the removal of these IR35 related measures from the Finance Bill. The association also called for a wholesale review to be take place.
“Today I have been told by a representative of the Treasury Select Committee that the Committee had planned to use our letter as evidence in a formal enquiry concerning controversial aspects of the Finance Bill,” said Marlowe. “However because of the election announcement that enquiry is not now proceeding. All the same, the Committee will publish ARC’s letter as evidence for MPs to consider when reviewing this aspect of the Finance Bill next week.”
Marlowe added that he and the ARC are pleased with the action taken by the Treasury Select Committee, having ‘done everything in our power to draw this issue to the attention of our elected representatives’.
“It is now up to them whether to exclude the measures out or not,” he added. “I sincerely hope that a positive result emerges not least given the precedent that the measures, if allowed to proceed, could set for the private sector, and ultimately the principle of flexibility in the UK labour market.”