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IPSE Respond to HMRC Briefing on Off-Payroll Reforms

IPSE Respond to HMRC Briefing on Off-Payroll Reforms

The IPSE has responded to HMRC’s Briefing on reforms to the Off-Payroll Rules published on October 22nd. The Briefing document gives a brief summary of the off-payroll reforms, which will see the responsibility for IR35 assessments shift from the limited company contractor to the client engaging their services. HMRC reaffirm their belief that the reforms are both necessary and have been effective in improving compliance in the public sector.

IPSE’s deputy director of policy, Andy Chamberlain, said he was disappointed that HMRC is “stubbornly” standing by the CEST tool, stating: “HMRC has lost the vast majority of IR35 tribunal cases since 2017 – based on CEST tool rulings. You also have to wonder: if HMRC is so confident in the CEST tool, why is it changing now?”

Although the Briefing document states that HMRC will stand by current verdicts reached with CEST, it also adds: “provided the information entered is accurate and it is used in accordance with our guidance.” However, with broad questions and inadequate guidance notes, it’s easy to blame the contractor or client for inputting ‘inaccurate’ information, while maintaining that the tool is effective.

Chamberlain continues: “The truth is the CEST tool is extremely unreliable. In fact, HMRC admits that in 15 per cent of cases it can’t even provide a determination. In all our talks with HMRC, they have been adamant they will not change it to factor in mutuality of obligation. Therefore, we doubt this ‘enhanced version’ will improve matters at all for the self-employed.”

The Briefing also states that HMRC is actively supporting affected businesses with “one-to-one support for 2,000 of the UK’s biggest employers and direct communications to around 15,000 medium-sized businesses.” However, there is a concern that many businesses will fall outside the scope of the support, leaving them vulnerable to potential mistakes.

As for the Briefings assurance that ‘legitimately self-employed people will feel little impact’, Chamberlain responded: “Tell this to the thousands of contractors working for Barclays, Lloyds, HSBC and Tesco Bank.”

On the 23rd Oct, Royal Bank of Scotland joined the growing list of banks making blanket decisions that all existing limited company contractors must go PAYE or by February 28th. The policy allows them to opt-out of making ‘risky’ assessments, as IR35 doesn’t apply to contractors whose taxes are deducted at source via an umbrella or agency.

Limited company contractors are advised to take interim measures to inform and protect themselves against the possible loss of work. By joining a reliable umbrella company, contractors can avoid being caught out by blanket rulings or other contingency measures that companies may take to reduce risk. This means that contractors can avoid disruption to their assignments, while their limited company can be placed in a dormant state should the current situation change.

For more information on the proposed off-payroll reforms, read our article here. If you’ve been affected by blanket decisions or if you feel that you need guidance on IR35 issues, we have a range of reliable solutions. To talk to a member of our team, call: 0203 603 1878

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