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Contractors struggling to survive the storm caused by IR35 reforms

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The result of the IR35 petition is out

The HM Treasury recently responded to the “Scrap IR35 legislation reform” petition which was launched in November 2016, and they have refused to cancel the changes taking effect from 6 April, 2017. The government body is of the opinion that it is vital to go ahead with the reforms to bring down the number of self-employed professionals who evade tax.

HMRC has, time and again, mentioned that 90% of public sector contractors don’t comply with IR35; however, they have never been able to substantiate this fact. This time, the government body smartly mentioned that only 10% of people who should pay tax on at least part of their company’s income under these rules actually do so.

HM Treasury further emphasized on how important it is for public sector bodies to ensure they and those who work for them pay the right amount of tax. Moreover, those contractors who wish to challenge their employment status can take their rights to an employment tribunal irrespective of whether or not they are classified as employed for tax purposes.

So the bottom line is – contractors must buck up for the IR35 reforms and get their employment status assessed at the earliest. If moving to a new employment solution seems apt, then now is the time to switch. Visit our Contact page to schedule a non-commitment phone appointment with one of our team.

Where is the ESS?

We are already towards the end of February, and there is no sign of the much-awaited online tool of HMRC. The tool, created with a view to help public sector bodies to determine whether or not a contractor falls inside or outside IR35, has not been exactly embraced by the self-employed professionally.

The beta version of Employment Status Service or the ESS was expected to be released on 25 February 2017, but there's no sign of it as of now. The reasons for the same are many, but all unverified. One such report says the tool crashed when 25 people used it at the same time! Let’s hope we don’t have wait much longer.

Troubling times ahead for gig workers; major changes in the pipeline

Mathew Taylor, a former political strategist, has been appointed by Prime Minister Theresa May to review the modern recruitment practices – specifically temporary contracts and the gig economy. The changes that he will be looking at include allowing agency workers on variable hours the right to request for a permanent contract after a certain point of time.

This step will probably be taken because recruiters currently face losing many agency workers on their books and potentially loss of income. It was recently reported that half of limited company contractors plan to quit the public sector over the IR35 reforms that are set to take course from April 6. A survey of almost 2,000 contractors by Qdos, a taxpayer-funded body, shows that 85 per cent will abandon their contract and move to the private sector.

There’s no doubt that this will impact the contractor community in a big way as it will reduce the number of temp workers.

Less than two weeks left for Budget 2017

Budget 2017 holds the key to the fate of contractors. What do you think Chancellor Philip Hammond will announce on 8 March?

Stay tuned.