IR35: Still being debated

Charlotte Barbour - NEW profile picture By Charlotte Barbour, ICAS Director of Taxation

12 February 2020

Charlotte Barbour reports on a call to give evidence to a House of Lords inquiry.

ICAS has a public interest remit – a duty to act not only for its members but for the wider public good. Our technical experts work in a positive and constructive manner to advise policy makers on legislation and to raise issues of importance to our members, individual taxpayers and business alike.

We were delighted to be asked to contribute to the House of Lords Finance Bill Sub Committee (FBSC) inquiry on IR35. Justine Riccomini, who heads up the ICAS work on employment taxes, gave evidence at a hearing on 10 February.

The FBSC inquiry is examining the Government's proposal to extend the off-payroll working rules – which were introduced for the public sector in 2017 – to large and medium-sized organisations in the private sector from April 2020.

The proposal would mean that businesses will be responsible for deciding whether contractors they hire are liable to pay income tax and National Insurance contributions as quasi employees, and if so, for paying those sums, including employer’s NICs, where they are the deemed fee-payer.

The inquiry is considering a number of points including the following questions:

Existing measures in the public sector

  • What has been the experience of the new rules in the public sector?
  • What lessons have been learned from this experience, and how have they affected the Finance Bill proposals?

Impact of the new rules on organisations

  • Has the impact of the extension of the rules to the private sector been adequately assessed?
  • Is the exclusion of small organisations sufficiently robust?
  • What effect will these new measures have on a chain of contractors and sub-contractors?
  • What should HMRC do to help businesses understand the new administrative rules?

Determining tax status of workers

  • Are the tests for determining employment for the purposes of these rules sufficiently clear to both engager and worker?
  • What is your assessment of the Check Employment Status for Tax (CEST) tool?
  • Does the CEST require improvement? If so, how might it be improved?

Policy objectives

  • In your opinion, are there better or simpler ways in which the objective of the new rules might be achieved?
  • Will the Bill, as drafted, achieve the Government's objectives?

The ICAS team will be putting together written evidence and if there are points you’d like us to include please let us know either on CA Connect or directly at tax@icas.com.