Scrap consultation on public PSCs, HMRC told

The host of a seminar with the taxman is ripping into one of the claims he made to attendees, arguing it to be so baseless that he should now scrap his consultation on public sector PSCs.

The Freelancer & Contractor Services Association, which let tax officers speak at its latest London event, said HMRC’s claim on the day that 90% of PSCs flout IR35 seems unproven.

“There does not appear to be any substantiated data to support HMRC’s 10% compliance claim, or at least none that they are able to share publicly,” said FCSA’s boss Julia Kermode.

She was speaking following the publication of a report by the Public Accounts Committee which implies that, for 2013-14, the IR35 compliance rate of public PSCs was closer to 90%.

First unveiled in March 2014, the supporting research is from the Treasury and cites “satisfactory assurance” on tax affairs being received 2,248 times in 2,505 cases.

“This contradicts HMRC’s assertion that only 10% of contractors who should apply IR35 rules actually do apply those rules,” argued Kermode, referring to comments by HMRC’s Julie De Brito on Monday April 11th.

The FCSA boss added: “It is inappropriate to persevere with a consultation which appears to have no supporting evidence and where the rationale seems fundamentally incorrect. 

“The implications of the proposed changes will be significant, and based on the government’s own findings there seems to be no justification for reform.”

Elsewhere in the PAC’s report, it acknowledges that the government relies on the temporary workforce to fill skills gaps, notably in IT and programme/project management.

The association warns that 'pay-rolling' PSC workers, which the consultation is set to propose, will hike costs and increase hirers’ administrative and regulatory burdens.