The new IR35 off-payroll rules for the private sector are under investigation; first by the House of Lords Finance Bill Sub-Committee and then by the National Audit Office, ContractorUK reports.
Beginning ahead of the Autumn Budget 2021, on October 22 and October 9 respectively, the two separate inquires will each focus on the April 2021 “implementation” of the rules.
However, the peers’ probe is said to be challenging experts more. Its scope is wider than the NAO’s probe, which will explore “lessons HMRC has learned” from the public sector’s adoption of IR35 reform.
Technically a follow-up, the peers’ probe is under tighter time constraints because the Lords want to hear from contractors by Nov 15 2021, whereas the NAO inquiry is not until “winter 2022.”
A factor that unifies both investigations - to the detriment of those affected by IR35 who are keen to see change - is that the experts are reportedly pessimistic about the outcomes.
Status adviser Kate Cottrell said she is ‘not holding her breath,’ in part because the Lords were previously damning of the rules, meaning “all we can hope for now is that the government takes notice this time around.”
Ms Cottrell continued, “Hats off to the Lords for announcing a follow-up to their excellent original report which slammed the government for not evaluating how the rules had worked in the public sector before rolling them out to the private sector.
“But it very much feels like ‘here we go again.’ How many more times does the government need to hear that IR35 and the off-payroll rules are a complete mess, and arguably already responsible for messing up another Christmas, with the exodus of all those HGV drivers?”
In a statement to ContractorUK, the Bauer & Cottrell co-founder added, “[Right on the money] the Lords warned of significant disruption if the off-payroll rules went ahead.
“What a brilliant read it will be when their next report is published. It will be another major embarrassment, in my view, but unlikely to result in any government reform to IR35.”
Tax lawyer Rebecca Seeley Harris also expects little change regarding off-payroll once the Lords committee concludes with its ‘recommendations’.
“This is an ideal opportunity to [give] feedback to the sub-committee, although it still doesn't mean the government will listen,” she commented on LinkedIn.
In a later statement to ContractorUK, Ms Seeley Harris - the author of CEST Explained - said she had made her ‘no change’ forecast despite peers being poised to ask some “robust and pertinent” questions.
Eight multi-faceted questions have been posed by the peers to help focus contractors’ submissions; on CEST; hiring issues, costs, and HMRC, among other areas.
Lord Bridges of Headley - reportedly due to chair the committee’s inquiry - said, “We’re carrying out this follow-up inquiry to find out about the experiences of engagers and contractors to date.
“We want to hear particularly from representative bodies about the experiences of individual contractors.”
Lord Bridges acknowledged that the committee’s initial report found the April 2021 off-payroll rules were “riddled with problems, unfairness and unintended consequences”, when he launched the new inquiry this month.
On October 25 Chris Mattingly - chief executive of IR35 Navigator - told ContractorUK, “I very much expect the follow-up inquiry will arrive at a very similar outcome.
“Since the reforms were implemented in April, we have seen very few engagers willing to embrace the new rules, instead choosing to ban the use of limited company contractors.
“This has forced many engagements inside IR35 by default, meaning many contractors have had little choice but to work through an umbrella company. And as the umbrella sector is not currently regulated, we can only assume many more contractors will have fallen prey to tax avoidance schemes.
“For this reason alone, I think the reforms will be deemed [by the Lords to be] a failure on all sides.”
Source: ContractorUK
(Links and quotes via original reporting)
The new IR35 off-payroll rules for the private sector are under investigation; first by the House of Lords Finance Bill Sub-Committee and then by the National Audit Office, ContractorUK reports.
Beginning ahead of the Autumn Budget 2021, on October 22 and October 9 respectively, the two separate inquires will each focus on the April 2021 “implementation” of the rules.
However, the peers’ probe is said to be challenging experts more. Its scope is wider than the NAO’s probe, which will explore “lessons HMRC has learned” from the public sector’s adoption of IR35 reform.
Technically a follow-up, the peers’ probe is under tighter time constraints because the Lords want to hear from contractors by Nov 15 2021, whereas the NAO inquiry is not until “winter 2022.”
A factor that unifies both investigations - to the detriment of those affected by IR35 who are keen to see change - is that the experts are reportedly pessimistic about the outcomes.
Status adviser Kate Cottrell said she is ‘not holding her breath,’ in part because the Lords were previously damning of the rules, meaning “all we can hope for now is that the government takes notice this time around.”
Ms Cottrell continued, “Hats off to the Lords for announcing a follow-up to their excellent original report which slammed the government for not evaluating how the rules had worked in the public sector before rolling them out to the private sector.
“But it very much feels like ‘here we go again.’ How many more times does the government need to hear that IR35 and the off-payroll rules are a complete mess, and arguably already responsible for messing up another Christmas, with the exodus of all those HGV drivers?”
In a statement to ContractorUK, the Bauer & Cottrell co-founder added, “[Right on the money] the Lords warned of significant disruption if the off-payroll rules went ahead.
“What a brilliant read it will be when their next report is published. It will be another major embarrassment, in my view, but unlikely to result in any government reform to IR35.”
Tax lawyer Rebecca Seeley Harris also expects little change regarding off-payroll once the Lords committee concludes with its ‘recommendations’.
“This is an ideal opportunity to [give] feedback to the sub-committee, although it still doesn't mean the government will listen,” she commented on LinkedIn.
In a later statement to ContractorUK, Ms Seeley Harris - the author of CEST Explained - said she had made her ‘no change’ forecast despite peers being poised to ask some “robust and pertinent” questions.
Eight multi-faceted questions have been posed by the peers to help focus contractors’ submissions; on CEST; hiring issues, costs, and HMRC, among other areas.
Lord Bridges of Headley - reportedly due to chair the committee’s inquiry - said, “We’re carrying out this follow-up inquiry to find out about the experiences of engagers and contractors to date.
“We want to hear particularly from representative bodies about the experiences of individual contractors.”
Lord Bridges acknowledged that the committee’s initial report found the April 2021 off-payroll rules were “riddled with problems, unfairness and unintended consequences”, when he launched the new inquiry this month.
On October 25 Chris Mattingly - chief executive of IR35 Navigator - told ContractorUK, “I very much expect the follow-up inquiry will arrive at a very similar outcome.
“Since the reforms were implemented in April, we have seen very few engagers willing to embrace the new rules, instead choosing to ban the use of limited company contractors.
“This has forced many engagements inside IR35 by default, meaning many contractors have had little choice but to work through an umbrella company. And as the umbrella sector is not currently regulated, we can only assume many more contractors will have fallen prey to tax avoidance schemes.
“For this reason alone, I think the reforms will be deemed [by the Lords to be] a failure on all sides.”
Source: ContractorUK
(Links and quotes via original reporting)