IR35 private sector delay encouraging employers to ‘get it right this time’

(3 minutes to read)

Kingsbridge Group: ‘It is important to remember that even when using HMRC’s own statistics, the vast majority of PSC contractors are, and will remain, genuinely self-employed and therefore “outside” IR35 following the planned reforms’.

A recent survey has found that the delay to the private sector IR35 roll-out has encouraged more employers to ‘get it right this time around’.

This is according to a survey of recruitment businesses carried out by Kingsbridge Contractor Insurance, which shows staffing companies reported that 35% were making a U-turn on non-PSC decisions.

The report also revealed that the extension has encouraged more employers to move away from HMRC’s widely criticised determination tool (CEST).

Thirty-one per cent of respondents revealed they were using it in the run-up to April 2020, just 18% are planning to use it this time around.

Thomas Wynne, Managing Director, Kingsbridge Group, commented, “It’s hugely encouraging to see so many employers reversing the blanket bans that were originally imposed, and we hope that more follow suit as organisations begin working with staffing companies to prepare and truly get it right this time around.

“With contingent labour likely to play an even bigger role in the UK economy over the coming few years as companies seek flexible resources in an uncertain market, it is more critical than ever that robust processes are in place that allow talent to be engaged in a compliant way and put in place relevant insurance cover to mitigate these new risks.”

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“It is important to remember that even when using HMRC’s own statistics, the vast majority of PSC contractors are, and will remain, genuinely self-employed and therefore “outside” IR35 following the planned reforms. What changes is that the responsibility for determining IR35 status will pass from the individual contractor to the end-client and the tax liability, should that determination later be shown to be wrong, will fall to the fee-payer.

Ann Swain, CEO of the Association of Professional Staffing Companies (APSCo), who provided the survey forward, added, “While the Government has delayed the rollout until next year to avoid economic disruption during the Covid crisis, we believe that this is simply delaying severe disruption to the self-employed workforce and is likely to further damage an already fragile economy. Given that Covid-19 has dramatically changed the economic landscape, many politicians continue to call for the changes to be scrapped in favour of legislating change to employment status as recommended by the Taylor Review.

“However, at the time of writing, the roll out into the private sector will happen as planned, though APSCo will continue to lobby the Government to review the employment and tax status of independent contractors to ensure it is fit for purpose in today’s economy.”

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