It was a hat-trick which led to Kenneth Wolstenholme coining the phrase “They think it’s all over” in 1966. Fifty years later, it’s another, less pleasant hat-trick which has led to this blog post.
If we kick off with the events in the news or, more precisely, news from the BBC. Whatever the rights and wrongs of BBC presenters using Personal Service Companies (PSCs), it sends out a pretty strong message that HMRC is still active and prepared to tackle IR35 head on. Every Revenue victory is simply encouragement to take on more PSCs and no-one should think for a moment that HMRC activity is confined to the media. Abbey Tax consultants have been dealing with IR35 enquiries in banking and finance, contractors working government departments – including HMRC (!) – oil & gas, and engineering. Their skill sets have covered the whole range: finance, IT, HR, management consultancy, businesses analysis and project management – no-one is safe!
Secondly, in a very recent development, we have been contacted by contractors in connection with engagements in the pharmaceutical sector. One company has advised all its contractors that HMRC has looked at a sample of the PSCs the company has engaged. HMRC wanted to check the fees paid by the company to the PSCs in order to compare the payroll deductions made by those PSCs; i.e. presumably to determine how many were treating the engagements as ‘caught’.
Following that review, HMRC has advised the company that it will be reviewing the IR35 status of a number of those PSCs. This has understandably alarmed all of the company’s contractors, although there is no suggestion that HMRC will suddenly investigate all PSCs engaged by the company, nor is there any suggestion that the company is aiding or encouraging HMRC in its investigations.
However, this does represent a change of strategy and is of genuine concern as the targeting of large engagers of ‘contingent workers’ isn’t a far cry from the current requirements for contractors to give tax assurances to the public sector bodies that engage – something which many contractors have felt was not far short of a witch hunt.
The third issue is simmering in the background like an active but unpredictable volcano. It has the potential to erupt and engulf the contractor marketplace, which is very concerned about the detail they might find in the 2016 Autumn Statement due on November 23rd. We are, of course referring to HMRC’s Consultation on the reform of IR35 in the public sector – and just how many of the proposals it is intended will be carried forward into legislation.
We commented on the consultation here on August 16, but the key issue is that HMRC wants the IR35 status engagements to be considered via an Online Status Indicator Tool – which it would also like the private sector to use – and if ‘caught by’ IR35 to have tax and NIC deducted at source. It does not seem that the consequences of the measure has been fully considered, nor does HMRC seem to have allowed enough time to implement changes by next April.
But, whatever the outcome, IR35 is still very much on the agenda; and one you need to make sure your clients understand. A contract review would offer peace of mind to anyone who finds themselves caught up in any of these three events.
So, before HMRC queers your client’s pitch, when it really would be all over, please contact our Contractor Section on 01788 702869 and let us help you help your clients with all things IR35.
Author: Paul Mason, National Contractor Manager
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