4 ways contractor tax reform could be managed.

Words, hubbul

As uncertainty continues to surround the future of IR35 – a legislation designed to combat contractor tax avoidance – a sector specialist has outlined ways the private sector could in fact manage controversial and potentially damaging reform.

In 2018, the Government is due to hold a consultation in which they will assess the impact of recent public sector changes and explore the possibility of extending reform into the private sector.

Despite calls on the Government not to go ahead with these plans, changes are widely expected in due course. This has led Seb Maley, Qdos Contractor CEO, to outline possible ways private sector companies and recruitment agencies could cope with the largely unwanted responsibility of making complex IR35 decisions.

Collaboration is key

 “An IR35 determination should take into account various factors, not least the aspects unique to the individual contractor being assessed. It is therefore vital that IR35 decisions are reached with the input of all parties in the contractual chain. Accurate IR35 decisions cannot be made without input from the company, the worker and when involved, the recruitment agency.”

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IR35 determinations must be made on the reality of IR35 in practice

“There is a huge amount of misinformation about IR35 legislation which has ultimately led, in part, to some public sector bodies making snap and blanket determinations which have no foundation in case law. HMRC’s CEST tool has received widespread criticism for missing some important factors out, contributing to many inaccurate IR35 decisions. It’s important to remember that this tool is not mandatory.”

Begin preparations now

"One stand-out problem caused by recent public sector reform was the lack of time; partly caused by HMRC’s lack of guidance, and partly because many organisations didn’t realise the significance of the task that lay ahead.

“In time further reform is widely expected. Because of this, private sector companies and agencies must begin preparing well in advance of the legislation actually being enforced. Engaging with contractors is a vital element of this.”

IR35 is a complicated legislation you might not want to tackle alone

“The very downfall of IR35 is its sheer complexity. Given many private sector companies have little experience or in-house resource when it comes to making well-informed employment status decisions, the safest way of ensuring accurate decisions are made is to engage a third party specialist.”

That a sector specialist has spoken out to calm fears that speculated reform could not be managed might well inject some optimism into the private sector which nervously awaits the Government's next move.

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