IR35: Off-payroll tax guidance issued – 'Wild west clearly needs some cleaning up'

IR35 tax changes were introduced from April 6 and going forward, businesses will be required to treat off-payroll contractors as on-payroll employees. This is expected to raise costs across the board and put companies off hiring the self-employed but there are steps freelancers can take to help their cause.

“We believe that the off-payroll reforms, which are now being rolled out into the private sector from April 2021, should be amended during the passage of this year’s Finance Bill and that tax law and employment law should be aligned.

“The direct threat of being classed as a ‘deemed employee’ is a fundamental problem for contractors/freelancers and client organisation.”

Following the release of this report, Dave Chaplin, the CEO and founder of ContractorCalculator and IR35 Shield, said: “There are some strong recommendations and worrying observations in this report and lots more work needs to be done so that contractors are treated fairly and properly.

“Before any legislation is passed, which won’t happen overnight, the supply chain should seek to introduce clear and better transparency to ensure workers are given full rights if they are considered to be ‘deemed employees’ under the new Off-Payroll tax rules that kicked in earlier this week.

“Some regulation to remove these distortions is needed to level the playing field.

“And there are of course concerns about some umbrella companies not acting in the best interests of their contractors, but it’s certainly not all of them. A strong dose of transparency, better auditing and some additional regulation, should hopefully drive the unethical ones out the market.

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“HMRC also needs to be much better at pre-emptively shutting these operators down by leveraging the data they already collate from agencies.

“This ‘wild west’ clearly needs some cleaning up but with the sheriff Matthew Taylor [the chief executive of the Royal Society of Arts who led an independent review into working practices] no longer in post who will pick up the mantle and sort it out before more damage is done?”



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