'IR35 is a blunt instrument' that HMRC cannot fund

“IR35 is a blunt instrument that HMRC has never been properly funded to enforce.” This is what Samantha Hurley, operations director of the Association of Professional Staffing Companies (APSCo) and co-chair of the HMRC IR35 forum said to Jesse Norman, chief secretary to the Treasury regarding IR35.

Ms Hurley said:

We believe that IR35 is a blunt instrument which HMRC has never been properly funded to enforce. The off-payroll changes will drive many genuinely self-employed professionals to leave self-employment entirely or abandon their Personal Service Companies to work within an umbrella company, as was the case for many independent contractors working within the public sector in 2017. Consequently, we also believe that the new rules will continue to drive increasing levels of non-compliant payment models, which the Government has been unable to get under control.

APSCo question the review of IR35, as it gave more time for businesses to prepare, however, we are now in late January 2020 and no-one has seen any final legislation and so do not know fully what to expect.

The association also questions the Check employment status for tax (CEST) as there are numerous concerns relating to its accuracy. The CEST tool is also being evaluated as part of the review.

Ms Hurley added:

While HMRC has developed the CEST tool as a no or low-cost option for businesses when making determinations, there are concerns about its accuracy.  Due to these concerns many of our members and their end clients (like many public sector departments before them) are having to consider extra expenditure on other external suppliers to make determinations.

When IR35 was introduced to the public sector the CIPD and the Association for Independent Professional and the Self-Employed (IPSE) found that more than half of public sector hiring managers felt that they had lost skilled contractors while nearly three-quarters (71 per cent) were facing challenges in retaining contractors.