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IR35 Forum – now there’s a challenge…

IR35 Forum – now there’s a challenge…

It’s time to get out the crystal ball, I believe. The inaugural meting of the shiny new IR35 Forum is on Friday 6th May. This is the body that Mr Osborne has charged with “improving the administration of IR35”. Which, given the present state of he administration of IR35, is a pretty open-ended kind of brief.

Clearly we aren’t going to see very much as a result of this first meeting. No doubt HMRC, who are in the chair, will present their Terms of Reference for the Forum’s agreement. Which will most likely be given, unless they contain something along the lines of “HMRC are right so there’s no point arguing” of course. They will agree the key issues such as which biscuits to buy and when next to meet, but that will be about it

But let’s assume they are honest about it – or that the other forum members keep them honest about it – and the objective is to deliver exactly what Osborne asked for, better administration of IR35. Let’s leap forward a year and see what may have happened. There are I believe three possible outcomes.

Firstly IR35 has been shown to be totally unworkable and will no longer be applied. Well that’s the dream result for some – like me, for example – but rather too far beyond the bounds of possibility. IR35 will still be festering away in the distance for a while yet. Heigh ho…

Secondly IR35 cases are only being brought against those who are genuinely within its scope. Well we can dream, but without changing the wording of IR35 so it becomes clear what that scope actually is, that is also a forlorn hope. For one thing HMRC are probably convinced that every case they’ve brought to date has been justified. For all their talk of “high risk” cases, if the rules aren’t changed the target stays the same; and that’s anyone that HMRC thinks they can bully into submission.

Finally IR35 cases are settled quickly and amicably. Yeah right. If there is no reduction in the number of cases being brought – and there aren’t that many in the overall scheme of things anyway – the only way to speed things up is for HMRC to start replying to the other side a lot quicker than they do. It’s not unusual for several months to elapse between each new step in the inquiry. Cases may well last for an average three years, but a lot of that time – probably 2 years 11 months of it – absolutely damn all is happening.

It’s also worth looking at the makeup of the Forum. There are HMRC people, tax experts of various shades, both independents and from the main industry bodies like ICAEW and CIOT, someone from the recruitment industry and a solitary representative of the freelance contractors in the shape of the PCG who, you might think, are the ones with the greatest interest in this whole debate. And who, it must also be said, are probably the only ones there who don’t have some kind of interest in maintaining the status quo. So clearly there is no question of the forum being biased in any particular direction then. Which is nice.

So I am not all that optimistic that anything significant will have changed. Although, along with 1.4 million other contractors, I would be delighted to be proved wrong.

Now there’s a challenge…

About the author: Alan Watts

Alan has worked in IT for most of the last 35 years, and first went freelance in 1996. He has been a PCG member from its start and has been spreading the message that freelancing is a professional career choice for many years. Alan also runs Malvolio’s Blog, a personal but highly informative take on the life of the modern freelance.

Alan Watts, Principal Consultant, LPW Computer Services

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited

Image: tubey fight by JSF539

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