Treasury reply to IR35 reform petition ‘sounds like a stuck record’

The government has been accused of churning out the “same old stuff” in its reply to a ContractorUK reader who is petitioning it to halt private sector IR35 reform.

In fact, HM Treasury’s reply to the ‘Repeal IR35 reform’ petition of contractor Nigel Scragg sounds “like a stuck record,” says former tax inspector turned status specialist Kate Cottrell.

Mr Scragg agrees. “It‘s the [government’s] usual stock response,” he said, sounding disappointed.

“[Worse still it was] provided a day before the new PM and chancellor took over. A very sneaky way of closing down [the] argument”.

'Silly'

The coronation of Boris Johnson, who has vowed to review another contractor-centric rule, and Sajid Javid, who once called IR35 “silly”, led to optimism from contractors’ advisers.

Among them was Ms Cottrell, who now feels that it was misplaced.

“[Mr Johnson] seems to be promising to spend such a lot of money everywhere that they will have to implement the off-payroll rules in the private sector to cover it all -- and again, it will be irrespective of any feedback on the draft legislation,” she said.

Some of the most scathing feedback to the consultation on Off-Payroll Working in the Private Sector concerned CEST. And the widespread criticism has continued since the government’s response to respondents.

'Thoroughly tested'

But the government has also now responded to Crispin Blunt MP who, seeming to doubt CEST’s suitability, asked the Treasury which elements were tested, how and by whom.

“All elements of the Check Employment Status for Tax service (CEST) were thoroughly tested,” began Treasury minister Jesse Norman, replying in the House of Commons.

“In a series of workshops, officials and external experts, including lawyers, tax and IT professionals, developed the set of rules that underpin the tool.

“The workshop participants agreed the key relevant facts and points of law and then tested the rules that went into the tool to ensure it gave the correct answer. Those rules were then tested against live and settled cases.”

'Don't apply to the self-employed'

The government also said, responding to Mr Scragg: “The rules apply only to individuals who are working like employees through their own company and do not apply to the self-employed.”

The official response to his petition, which has almost 25,000 signature adds: “Though the rules are now operating effectively in the public sector, non-compliance is growing elsewhere. That is why at Autumn Budget 2018 the government announced that it would extend the reform to all medium and large organisations from April 2020.”

Not satisfied, Mr Scragg says he will next arrange a face-to-face meeting with his local MP to outline to her why the 2020 framework is “unfair.”

'Useless'

He is also looking forward to running a live demonstration of CEST to show his MP, in real-time, how “useless” and “inaccurate” both the tool and its results are.

After all, the government is “currently seeking feedback from experts and stakeholders on the draft legislation,” HM Treasury says in its petition response.

In a message to the likes of Mr Scragg, an infrastructure consultant, officials added: “The government values the contribution of flexible workers to the UK economy. However, it is also under an obligation to ensure fairness between individuals who work in a similar way.”