Don’t rush private sector reform, says REC
(3 minutes to read)
The Recruitment and Employment Confederation (REC) is calling on the government to avoid rushing through IR35 private sector changes.
Citing evidence from public sector changes, the REC believes they could be counterproductive for the Treasury and damage the jobs market at a difficult time for business with Brexit on the horizon.
A new survey of REC members, forming part of their Budget submission, indicates:
– 72% of members surveyed said that early implementation of IR35 in the private sector would lead to an increase in tax avoidance schemes and non-compliant intermediary models
– 42% of members surveyed said that they had observed an increase in the number of non-compliant umbrella/intermediary models since the introduction of the public sector IR35 reform in April 2017
– 74% of members surveyed said that early implementation of IR35 in the private sector would cause reduced flexibility in the labour market to adapt to changing conditions.
REC chief executive Neil Carberry, commented, “Everyone should pay the correct amount of tax. But rushing through poorly designed reforms to contractor tax in 2019 could be a gift to the unscrupulous – encouraging those who use tax avoidance schemes not those workers and companies who do the right thing. With many of recruiters seeing a rise in avoidance in the public sector since changes made last year, the vast majority of recruiters are clear that the Government needs to pause for thought on IR35.
“The ongoing employment status review should be completed before any changes are made. And with Brexit causing uncertainty for all UK business, the government can ill afford to introduce reforms which risk damaging the flexibility of the labour market at a time like this.”
He added, “The REC wants the Government to conduct a comprehensive impact assessment of the IR35 public sector reforms before progressing to the private sector. Worryingly, previous problems with unregulated intermediary company models have clearly worsened as a direct consequence of the reform in the public sector.”
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