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Contractors Expecting IR35 Update in Autumn Statement

Contractors in the public sector will be taking a keen interest in Chancellor Philip Hammond’s first Autumn Statement. Being presented on Wednesday, it will be an interesting indicator to the whole country of the economic direction the government plans to pursue. But it could also have a direct impact on contractors in the public sector, with an announcement expected to be given on the date of introduction for new IR35 rules.

 

Earlier in the year, a new approach to IR35 in the public sector was opened up for public consultation. The proposal would transfer the responsibility for ensuring a limited company contractor does not fall within IR35 to the party that pays the contractor, rather than the contractor themselves. It’s likely that risk averse parties in the public sector would simply make contractors go on payroll in response. However this would likely result in contractors taking home less pay, meaning they’d either begin to refuse public sector contracts or insist on receiving higher rates for public sector roles in order to compensate for the reduced take home pay.

 

HMRC has said that they are working on a digital tool that will provide a real-time assessment on whether IR35 applies. However there is a lot of scepticism from those in the industry about how much use this will be. Dave Chaplin, Contractor Calculator CEO, commented in July: “IR35 is underpinned by employment case law, which requires years of experience to fully understand. In reality, the only way to ever really know the IR35 status of a contractor is to ask an experienced status expert to look at it, and then to get it tested in a tax tribunal or in court.

“There is simply too much to consider for one to reach a conclusive judgement based on an objective questionnaire, yet this is what HMRC claims it will do within its consultation,” he adds.

Outside IR35 reform, in October Theresa May hired Matthew Taylor, Tony Blair’s former policy chief, to look at workers’ rights in the ‘gig economy’. This independent review will look into how employment practices need to change in order to keep pace with modern business models. It will also examine how flexibility can be balanced with job security and workplace rights. We predict the Autumn Statement to give an indication of which direction they expect to head in first, so will be monitoring this with interest.

 

Finally, we also expect to see announcements of large-scale infrastructure investment, which could be good news for contractors. The Chancellor has privately made it clear that, if a fiscal stimulus is needed, it’s more likely to take the form of infrastructure projects than VAT cuts. So this would be welcome news for contractors who are a crucial part of any large projects which need both big numbers of workers and people with specialist skills.

 

No matter what announcements Wednesday brings, Contracting Scout are on hand to help with any question or concerns. Just get in touch.