Contractor tax experts share closing IR35 consultation fears

A contractor recruitment body is not alone in feeling that there is more than just a touch of ‘fait accompli’ to the private sector IR35 reform consultation.

In line with APSCo, contractor tax firm Orange Genie fears that the Treasury has already decided that last year’s IR35 reforms in the public sector will go ahead in the private sector.   

“Call me cynical,” says the firm’s boss Graham Fisher, “but my view is that they've already made up their minds and our submissions [to the consultation] won't make any difference.”

He says a “victory” for the contractor sector would be HMT’s response to the consultation, which closes this Friday morning, offering to delay the extension of the reforms until 2020.

“Pushing millions of SMEs into undertaking IR35 assessments by Q1 2019 would be a remarkable decision,” Fisher says. “Problems with enforcement need to be dealt with [first].”

It is even more ‘remarkable’ according to James Trowell, head of tax of Dolan Accountancy, because the government is going to reform ‘blind.’

“How [can] government [now target the private sector] when it won’t even know the full tax implications of the changes made last year until tax returns are filed in early 2019?” he asked.

DNS Associates, another contractor accountant agrees. “They should test the public sector results for a few more years yet and not rush a private sector implementation.

“Quite how can they gamble an industry which is cash-cow for them [at a time] when we are really fighting to manage Brexit, is just plain reckless.”

It’s also looks greedy to the firm’s boss Sumit Agarwal. “The government is clearly looking at net numbers and their additional collection of £410million is kind of a victory for them.

“They want to replicate the same in private sector”, he said. “And of course, it suits both the Treasury and HMRC, as they are collecting more [tax] and they need to do less policing.”

But the envisioned rollout of 2017’s IR35 changes, under which the client takes the PSC’s right to decide their IR35 status, “could be a fatal blow to the self-employed economy”.

Dolan Accountancy’s Mr Trowell, who has replied to the consultation, also said that no matter what HMT decides (or has decided), “hopefully, a strong contractor community will prevail.”