Despite claims from the Conservatives to review IR35, 2020 will brings plenty of uncertainty for contractors.
This is the opinion of David Redfern, managing director of DSR Tax Claims. At the time of press (23/12/19), no news has come from the Government that IR35 will be reviewed.
Mr Redfern said:
The private sector IR35 reform comes into force at the start of the new tax year on 6th April and all indications suggest that it is going to be just as, if not more, problematic in the private sector as it has been across the public sector. No one would suggest that HMRC is wrong to crack down on tax evasion and employers and contractors alike trying to shirk their tax responsibilities through disguised employment but the wide scale disruption seen across public sector contracting would be an unwelcome addition to the workforce.
The Queen’s speech which took place on 19/12/19 made no mention of reviewing the tax legislation.
This prompted more uncertainty as people had predicted that the review would be outlined in the Queen’s speech.
There was one vital thing missing: IR35. During the election, Chancellor Sajid Javid pledged that the Conservative Party would review the disastrous changes to IR35 due to come into the private sector in April.
To add to the situation, HM Revenue & Customs (HMRC’s) tool for determining employment status, Check Employment Status for Tax (CEST) has come under fire, even after a revamp from the Government department.
Mr Redfern said:
Employers are expected to use CEST to ensure that they are correctly determining the employment status of any contractor they intend to use and HMRC have taken some of the concerns surrounding CEST into consideration and it has now been updated to assist employers in determining employment status, however it still has a number of gaps in its understanding of the contracting sector and the issues surrounding mutuality of obligation (MOO) have still not been addressed.
DSR Tax Claims provides guidance to freelancers and contractors for tax purposes.