IR35 changes in the private sector: our messages to government

Nov022017

Party conference season is over and Westminster is well and truly back to work. Eyes are now on the Treasury as we await the Chancellor’s first Autumn budget and speculation is rife. The off payroll rules in the public sector were in the headlines over the weekend. Despite our efforts and those of other major trade bodies like CBI, FSB and IPSE, it seems as if the changes in the public sector may be replicated in the private sector at some point, perhaps as early as this budget. 

What we are doing

This is an issue we have been monitoring throughout the summer and we have been raising our concerns about IR35 in the public sector with HMRC, BEIS and other government departments. We also expressed our concerns in our pre-budget submission to the Treasury.

Over the last week, we have contacted Mel Stride, Financial Secretary to the Treasury and written to the Chancellor. Next week, we are meeting officials from HMRC to relay member concerns. We are also surveying members on the impact of the changes and the issues that need to be addressed. You can complete the survey here

Our key messages to the government are:

A long term solution needs to be found for tax and employment status

Rather than tinkering around the edges, the government needs to adopt a more holistic approach to tax and employment status. We support the government’s commitment to ensuring that everyone pays the correct amount of tax but many of the employment practices seen today are a direct product of our existing tax system. That why we have called for the work of the Cross Government working group on employment status which has been on hold since October 2016 to be progressed so that the long-term future of tax and employment status can be looked at, as recommended by the Matthew Taylor Review into employment practices earlier in the year.

The lessons from the public sector need to be learned

If the IR35 changes are to be rolled out to the private sector, then the government needs to ensure the implementation is smoother and the issues with IR35 are addressed. There needs to be a longer implementation period that gives businesses, contractors and recruiters enough time to prepare. The rushed implementation in the public sector was disruptive, creating confusing and uncertainty.

Issues in the public sector need to be addressed such as the employment status for tax tool, the treatment of expenses and employment status of contractors. The private sector should also be consulted on these changes. With Brexit on the horizon, dropping business confidence and growing uncertainty, it is essential that the competitiveness and flexibility of the UK’s labour market are not undermined by rushed reforms that are not fit for purpose.

What's next?

If you are concerned about these changes, please complete our survey which will strengthen our case in discussions with government departments. 

If these changes are rolled out, the REC legal team will support members as we did earlier this year with IR35 in the public sector. We will continue to raise your concerns and impress upon the government how important it is that measures like this do not have negative or unintended consequences for the labour market.

This entry was posted on Thursday, November 2nd, 2017 by:

Karen O'Reilly is the REC's Stakeholder Engagement Manager

Karen O’Reilly works with the policy team to represent the interests and concerns of  members to policymakers and stakeholders in a number of sectors including executive search, interim management, financial and legal services, HR and office support. She also works on cross-sectoral issues including employment tax and social mobility and inclusion policy. Prior to joining the REC, Karen worked at the British Chambers of Commerce.  

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