According to Brookson One – HMRC has issued their eagerly-awaited consultation on IR35 reforms in the private sector which they say “looks at improving the rules around ‘off-payroll’ working so contractors who work through their own company pay the right tax.”
In the Autumn Budget 2017, the government revealed it would consult on how to tackle non-compliance with the off-payroll working rules in the private sector and vowed to consider the evidence of how the public sector reform has gone as well as taking into account any potential impact on businesses and individuals within the supply chain.
With this consultation announcement, HMRC suggest that they are not simply planning to replicate changes brought into effect as part of the public sector reforms but instead is considering other options including supply chain assurance and additional record-keeping.
Only time will tell if HMRC have learnt from the negative impact reported on the back of the public sector changes and use this consultation to recognise and protect the economic importance of the flexible workforce.
Pendulum Contracting Services would urge the Government to take time to consider the right approach based on input from across the industry and to draw on experiences from the public sector reform. It is also important that the government work with businesses and individuals to mitigate the potential administrative burdens of any future changes. It is also important for recruitment businesses and private sector end-hirers to consider that the proposed changes would mean for their business processes to ensure they can continue to support genuinely self-employed contractors. Businesses failing to implement processes to support professional contractors could find their access to this important resource becomes restricted.
The consultation timescales mean that changes could still be introduced as early as April 2019, although hopefully any changes HMRC introduce are properly thought through so that we do not suffer any short to medium term unintended consequences at a crucial time for the UK economy as we move through the Brexit timetable.