House of Lords Finance Bill Sub-Committee writes to Jesse Norman, Financial Secretary to the Treasury, in lieu of evidence session enquiry into IR35 in the Private Sector
By Justine Riccomini Head of Taxation (Scottish Taxes, Employment and ICAS Tax Community)
30 April 2020
Justine Riccomini outlines what the House of Lords wants Jesse Norman to respond to as a part of its enquiry into IR35 in the private sector
Evidence hearing
ICAS was invited to present oral and written evidence to the House of Lords Finance Bill Sub-Committee in relation to its enquiry into IR35 in the private sector. Following a series of hearings (ICAS attended with ACCA, ICAEW, CIOT and ATT on 10 February) and collation of written evidence, the House of Lords has recently published a letter that was issued on 26 March.
The letter, from The Rt. Honorable the Lord Forsyth of Drumlean, Chair of the Finance Bill Sub-Committee, to the Financial Secretary to the Treasury, Jesse Norman, is a replacement for the oral evidence hearing which was cancelled due to COVID-19.
The areas covered are as follows:
The cost burden
The Lords consider that enough evidence has been placed in front of them to demonstrate a much higher cost burden to employers and business than that reflected in HMRC reports. They have requested that the Government reviews its original analysis and that it couples that review with an assessment of private sector business’ ability to recover from COVID-19 and be ready to encompass the reforms in April 2021.
Insufficient evidence gathered from the public sector arrangements
The Lords are not satisfied that sufficient independent evidence has been gathered to enable the Government to properly reflect on the implications of the roll-out of the revised off-payroll measures in the public sector before it commenced planning to roll it out to the private sector.
Blankets and umbrellas
The Lords expressed dissatisfaction in relation to the relative uncertainty and vulnerability of individuals working through Personal Service Companies and unregulated Umbrella Companies and asked that further investigation into sanctioning against the widespread use of blanket assessments, as well as unscrupulous Umbrella Companies, is undertaken to establish how these areas can be better controlled.
CEST and MOO
The Lords agreed with witnesses that CEST was not wholly satisfactory if it leaves 15% of cases (which, translated into numbers, runs to thousands) undetermined. They also wished to understand why Mutuality of Obligation is still not reflected within the status test when it is clearly a key element to the making of a status decision.
Collaborative working?
The Lords noted that there did not appear to have been a so-called “joined up Government” approach taken on this matter and that it appears to have been driven by HMRC with no real consultation with other stakeholder Departments.
Good work plan
The Lords did not find that the Taylor Report or Good Work Plan figured very heavily in the overall off-payroll working in the private sector reforms and has asked the Government to clarify the reasons for this.
Do you have any comments on how off-payroll working in the private sector should run? If so why not contact us at tax@icas.com and contribute to the debate?