Government replies to IR35 consultation respondents

The government has used an MPs’ debate on proposed IR35 reform to partially respond to parties who answered a consultation on the outlined framework.

“The government are consulting on the detailed design of the planned reform, and we are listening carefully to the representations made,” said Treasury minister John Glen MP.

“Our aim is to provide the individuals and organisations concerned with greater certainty about how the off-payroll working rules will operate from April 2020 in all sectors, including about the actions they can take to prepare for the changes.”

In relation to CEST, the minister said HMRC has held user “research sessions,” and will work with affected parties “over the coming months” to ensure the tool can “suit the needs of all sectors.”

This bold ambition is a departure from a previous Treasury official’s claim that “we are not going to build something that covers everyone” – only “the majority and that is the best we can hope for.”

At the MPs' debate, Mr Glen said of CEST: “Enhancements will be tested and rolled out before the reforms are introduced in 2020.

“I asked officials for greater clarity on what that is likely to mean, and we are talking about improved guidance, better phraseology and improved language that gives greater certainty to individuals who make inquiries.”

Addressing blanket IR35 decisions – a “legitimate area of concern” in the minister’s words, Mr Glen indicated they were an uncommon occurrence.

“The vast majority of public bodies are making assessments on a case-by-case basis,” he said, referring to research released last year.

“I have looked into how that research was done— HMRC commissioned an external independent organisation to speak to central government departments, the NHS and local government departments to ascertain that.”

“Having listened to people’s concerns, we included proposals in our recently published consultation to help to ensure that processes are put in place for individuals to resolve disputes with their engagers directly and in real time.”

The minister also responded to concern about the 2019 Loan Charge’s interaction with IR35 (the latter is widely known to have prompted advisers to recommend contractors to use schemes), albeit only to assert that there isn’t one.

He said: “[MPs] suggested that there is a link between the off-payroll working rules and disguised remuneration schemes. Disguised remuneration arrangements have nothing to do with the off-payroll working rules.”