Last year, Recruitment Grapevine spoke to Adrian Marlowe, Chairman of The Association of Recruitment Consultancies (ARC) about the beginnings of IR35. We pressed him for his thoughts on whether this vexatious legislative change in the public sector was doing as HMRC intended and it's financial, administrative and political impact. Perhaps predictably, he didn't think much of it: calling the changes "incredibly unfair", particularly on agencies.
The infamous part of Chapter Ten tax law, designed to recoup what HMRC perceive to be tax it is owed from contractors, was changed for the public sector in April 2017. The impact, as well as the manner in which it was introduced, was much to Marlowe’s chagrin – with ire saved for the Government’s consultation process. “You have to ask what’s the point in having a consultation if the Government has made a decision already,” he asked. Marlowe wasn’t alone in thinking that the approach had a hint of fait accompli about it.
A year on from the Government’s consultation on whether IR35 tax procedures should be adjusted in the public sector, and those affected by the legislation - contractors, hiring clients and recruiting firms - find themselves at a similar juncture. However, this time around HMRC are seeking serious opinion on whether changes should be extended to the private sector. In August, a HMRC consultation, which sought to take onboard the opinion of private businesses, including recruitment agencies closed.
Yet, the consultation itself has attracted criticism. Pete Holliday, Managing Director of Sopra Steria Recruitment, believes that the consultation was not as visible as it could have been – potentially cauterising the variety of feedback HMRC received. “The way the Government publishes the document doesn’t necessarily make it visible for businesses [to find and give their feedback],” he said. “When we then wrote to firms asking for their feedback, most weren’t aware a consultation was occurring. My view is that the consultation hasn’t been pushed out to businesses to genuinely capture their response. I’m worried it may not have reached enough clients.” Much like Marlowe’s gripes about the public sector consultation, Holliday’s criticism raises strong questions as to how much feedback HMRC truthfully wanted to collate.