IR35 Forum – 11 December 2017
Posted on 23rd December 2017 at 18:15
Representatives from Chartered Institute of Taxation (CIOT), Association of Chartered Certified Accountants (ACCA), The Association of Independent Professionals (IPSE), several others and HMRC met on 11 December 2017. This was the first IR35 forum since the announcement by the Government to launch a consultation into the roll-out of IR35 into the private sector.
What did we learn from this 2-hour meeting?
The key takeaway from this meeting was that although HMRC acknowledged that some issues had been identified by External members in relation to the Public Sector roll-out, the private sector roll-out is very much on their current agenda. HMRC were clear to state that “the government needs to deal with an immediate and growing Exchequer risk” and there was every inference that this would be sooner (April 2019) rather than later.
Concerns raised by External members
HMRC was presented with a paper compiled by the External members containing examples of issues arising from the Public Sector reforms. HMRC noted in the Forum Minutes, that “it would not be appropriate to publish” the document but welcomed the opportunity to discuss the issues raised.
Key points being:-
Concerns about blanket assessments being made
HMRC confirmed “applying a decision to a group of workers with the same role, terms and contractual conditions can be appropriate.” Whereas, “Ruling all engagements in or out, irrespective of the contractual terms and actual workings arrangements, is not”.
HMRC confirmed that would explore the concerns raised.
Concerns over the impact of delayed off-payroll decisions
Over the issues where some contractors found themselves having over/underpaid tax due to a delay by their agency or end client in determining their IR35 status, HMRC provided no comment.
Concerns that contractors are being targeted by non-compliant umbrella schemes and loan schemes
The concern being that contractors would find themselves in hot water through more outright tax avoidance as these non-compliant schemes swoop in to “help” contractors manage the reforms.
HMRC stated that they “would like to work with members on how to tackle this behaviour”.
Concerns that rolling-out to the Private Sector so soon, without a full evaluation of the impact on the Public Sector was ill-advised.
HMRC advised that they are keen to continue the consultation throughout 2018 and establish an ongoing dialogue. HMRC also noted that they were working to address non-compliance through meetings and workshops.
Concerns that HMRC had not addressed the issue of aligning employment status for tax purposes and employment rights.
HMRC acknowledged this, but insisted that it was not an urgent issue – and that it could be addressed later.
Mutuality of Obligation and CEST
Mutuality of Obligation (MOO) is one of the key tests of employment to determine IR35.
Under employment conditions, MOO exists as the employer is obliged to provide work for the employee and the employee is obliged to accept it. For most contractors, MOO does not exist as the company is not obliged to offer work after the end of the contract, and the contractor is not obliged to accept if it did.
HMRC’s Check Employment Status for Tax (CEST) tool launched to help contractors evaluate their IR35 status, has suffered widespread criticism since its introduction in 2017. One of the key reasons for this is due to the absence of any checks for MOO.
During the Forum, HMRC conceded that MOO is missing from its CEST tool but qualifies this by stating that “CEST does not explicitly look at MOO…It is assumed that a person using CEST will have already established MOO”. This view was challenged by the External members and remains a great interest in the media.
Can I read more?
Of course. For full details – you can read from the Forum Minutes here.
Watch this space! Keep following for more updates and information.
Nicola J O'Sullivan -
Founder | Xero Champion | IR35 Expert
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