IR35 is about the government, and HMRC and the Treasury in particular trying to clamp down on what they see as tax avoidance. This has gone on since Gordon Brown was chancellor, has changed over the years to try to make the regulation evermore ‘watertight’ and has achieved a significant degree of unfairness, much uncertainty and arguably actively discriminates against those freelancers clearly in business on their own account – you and I as professional Interims.
Yesterday, the Conservatives achieved a very strong result in the General Election as the population appears to have finally registered its dissatisfaction with the last House of Commons doing its best to frustrate the will of the people as expressed in the referendum. ‘Getting Brexit done’ seems to have resonated with the electorate.
The potential impact on IR35 is that in Sajid Javed, we have a Chancellor who said that the regulation needs reviewing, which we certainly agree with. In fact, we think this should be done publicly and independently and that it takes account of the tsunami of advice received from the industry warning of the problems the current approach will bring.
The IIM represents senior professional Interim Practitioners in the UK and has invested much time and effort trying to help guide the government along a practical, sensible path. As an absolute minimum, removing the ‘are you an officer’ question from the CEST tool would be welcome. The latest iteration of the tool – you can have a play with it here – fails still on a number of counts to deal with the case law established in tribunal and court.
If HMRC still can’t get this right, then the whole approach needs a complete re-think, before it kills the profession. Return the right to determine your tax position to the freelancer company. This was removed without a ‘by your leave’, trampling over the rights of people in business on their own account.
If it is OK to have this right remain when dealing with small client companies, then there is no logical reason why it should not apply with a client of any size. Identifying companies that legitimately operate as businesses can be done differently and ensure that anyone not accredited to trade in this manner becomes inside. The IIM has made this point in the past with no response from HMRC. In fairness, that is just the same as everything else suggested from so many quarters of the industry.
So, come on Chancellor, let’s try and get this right in the spirit of ‘one nation Conservatism’. Throw off the shackles of all the previous Tory Chancellors since Labour’s Gordon Brown and recognise that we have a world class Interim industry that needs your support and does not need to be treated like a group of tax dodging slippery toads trying to do the government coffers down! We take risk; we pay corporate taxes; we collect VAT, we add enormous value to UK PLC; we get no employment or unemployment benefits. And of course, since Chancellor Osborne, we get virtually no dividend taxation benefit either to reflect the business risk taken on.
During and post Brexit – we need our ‘A’ team on the field. Please help us to help you.