Executive Grapevine | Executive Grapevine International Ltd

The results of the latest IR35 consultation are expected soon – what will it mean for recruiters?

Waiting for news

Recruiters, contractors and affected businesses are currently waiting with baited breath for the results of the recent consultation into IR35’s roll-out in the private sector to be published.

In his last Spring Statement, Chancellor Philip Hammond announced that the consultation would take place with final details expected around this time of the year.

Although it has received mixed reviews in the public sector, it will be rolled out into the private sector in April 2020.

As is stands, and before the latest consultation ended last August, HMRC is on the record as saying that it's interested in fixing concerns regarding non-compliant intermediaries and how to sort out the mess that are ‘blanket rulings’ that place all workers inside or outside IR35. The result is employers, and liable agencies, being terrified to make mistakes.

To find out what the consultation results will mean for recruitment, Seb Maley, CEO, Qdos told Recruitment Grapevine what can be expected from the next IR35 forum and what the consultation results will look like.

So, what’s happening now?

“I expect the suggestions that HMRC put forward will be very similar to the public sector rules, with some largely aesthetic adjustments. I don’t envisage that much imagination will have been used, nor do I think the continued backlash to the future changes will have been heeded.

“This in itself is a problem. The implementation of public sector reform was chaotic, largely due to HMRC’s lack of guidance and support. Recruitment agencies can hope for the best but must start preparing for private sector changes without relying too much on HMRC for assistance.”

More promises over CEST?

“Due to the fact it continues to give inaccurate IR35 decisions, CEST [HMRC’s self-assessment taxation tool] has been criticised since it was released in the lead-up to the public sector reform in 2017. In response, the government has continuously promised (without delivering) to improve the tool. So, we could hear more from HMRC on how exactly it plans to improve CEST before private sector changes arrive in April 2020.

“However, given that CEST fails to take into account a number of fundamental aspects of the IR35 legislation, huge changes will need to be made to the tool’s technology and logic in order to make it reliable. In my opinion, HMRC’s insistence that it is fit for purpose makes it unlikely that we will see plans for any drastic changes.

“For this reason, recruitment agencies are advised - and perfectly within their right to - engage the help of a specialist when making IR35 decisions. Relying solely on CEST when assisting with IR35 assessments poses a big risk to agencies.

 

Specific guidance

“The IR35 consultation is expected to provide details on how the government plans to implement private sector changes more successfully than public sector reform in 2017 - which contractors, recruitment agencies and public sector bodies are still feeling the effects of.

“One of the reasons public sector changes resulted in such chaos was because HMRC barely offered any genuine support to engagers. The government has said it will carry across learnings from the public sector, but whether we see anything concrete about how HMRC hopes to introduce changes smoothly this time around remains to be seen.

“The private sector is much bigger than the public sector and also more diverse. The government must take into account that different businesses and sectors could well need industry-specific advice around the implementation of the rules.”