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Industry bodies condemn new IR35 reform consultation

A new IR35 reform consultation published by Her Majesty’s Revenue & Customs has been roundly condemned by trade industry bodies since it went public.

It’s been a bit more than a “chilly reception” when it comes to the HMRC’s new IR35 reform consultation. In fact, I’d characterise it closer to “withering hail of condemnation” than anything else, as organisations have come out of the woodwork to tell the taxman how absolutely horrid its plans are for reforming the way personal service companies working in the public sector handle disguised employment issues.

One such organisation, contractor accountant and insurance specialist Qdos, characterised the whole mess as inherently unfair. The organisation’s reasoning is that with contracting for state bodies being what it is, the questions asked to personal service company contractors to see if IR35 applies will always come up as yes – which would more or less catch every PSC contractor as under IR35, regardless of whether they actually should be or not.

The results of this new IR35 reform, should it actually go forward unchanged (and heaven knows how much HMRC loves to ignore any sort of constructive criticism) is likely going to result in freelancers and contractors will desert the public sector in groves, according to the Association of Independent Professionals and the Self-Employed. IPSE says the UK as a whole will be the losers here; there may be large consultancies that will be drafted in to fill the sudden public sector void, but those will likely be the only winners in this scenario.

Meanwhile, the Freelancer and Contractor Services Asociation says that it’s bewildered that these new proposals are even being tabled by HMRC. The FCSA expressed disappointment that the tax authority seems to be focusing its efforts on how to implement this new legislation instead of whether it should be put into place at all. The new framework is so fundamentally wrong, as well as unethical and unfair, according to Julia Kermode, chief executive of FCSA, that it’s practically a moral imperative to challenge this mess. IPSE chief executive Chris Bryce tacitly agreed, saying that the new IR35 reforms are more or less proposals to tax contractors as full employees without providing any of the statutory rights that you get as an employee.

What a bloody mess. I can only hope that somehow this complete abortion of tax legislation ends up being tossed out with the rest of the rubbish before it’s too late!

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