The Conservatives have held an invitation-only parliamentary meeting on IR35 and the off-payroll working rules.
It was the party's first meeting on HMRC's 'disguised employment' legislation since Andrew Griffith MP said on October 6th that a Tory government would 'look again at reforming' IR35.
'Not much to report'
Experts on IR35, including legal, tax and status advisers regularly enlisted by contractors and end-users for their services, attended the meeting.
It took place behind closed doors on Tuesday, November 18th.
One attendee came away feeling underwhelmed as despite joining the hour-long session, they told ContractorUK afterwards that there is "not much to report at this stage."
'What should a Conservative Government's IR35 policy be?'
Nonetheless, the meeting posed attendees four not insignificant questions, chiefly, "What should a future Conservative Government's policy on off-payroll working and IR35 rules be?"
It also asked the contracting experts: "How has HMRC approached enforcement of IR35 rules?"
The question explains the presence at the meeting (which was chaired by shadow business secretary Mr Griffith) of Gareth Davies MP, the shadow financial secretary to the Treasury.
'The problems are much bigger than just IR35'
Unsurprisingly, perhaps, "tax" was the main talking point of the Tories' first IR35 meeting since their vow to look again at IR35, according to attendee Rebecca Seeley Harris, of Re Legal Consulting.
She recalls being keen not to overly discuss one point in isolation, as she backs a "joined-up approach," as advocated in her "Employment Status Roadmap" (which the two Tory MPs received).
"I explained that the problem was much bigger than just IR35," Seeley Harris, a former HM Treasury secondee who now specialises in employment status, told ContractorUK.
"There are multiple problems in the labour supply chain as a whole, both from a tax perspective and in employment rights. It needs a cross-government working group to solve these problems".
'IR35 is a mess'
"The IR35 rules are a mess," agrees Mike Newton, the former Tory parliamentary candidate for Wolverhampton West.
In a well-timed op-ed (published just 24 hours after the Tories' IR35 meeting), he added: "The central problem with IR35 in its current form is that it discriminates against small businesses who legitimately want to act as contractors, but are frozen out.
"I was speaking to an accountant up here in the Midlands on this issue, and he noted, 'We see many larger businesses just applying a blanket judgement to refuse limited company SMEs as a contractor — even in cases where a CEST certification has been carried out — in order to limit exposure to risk of any compliance checks by HMRC.'
"This cannot be right."
'Make some reforms to IR35'
In his op-ed for Conservative Home, Newton went on to say that a "judicious solution" for Mr Griffith "and his colleagues [who] have shown they are serious" about tackling IR35, "would be to make some reforms to IR35".
Newton wrote that another "option" for the Tories "would be full abolition of IR35, and remove the firewall between who is an employee and who isn't."
He also wrote: "There are many things more exciting than IR35 reform, but it is important. It is up to us to make sure that we take the fight to Labour and Reform on this issue."
'Shocked about politicians' vows to axe IR35 entirely '
Last night, an adviser to contractors said they were "quite shocked" to hear those seeking office insist that they would axe both IR35 and the OPW rules of 2017/2021.
Declining to be named, the adviser told ContractorUK that they "cannot see how any of them could abolish IR35 and OPW completely," without "doing something else huge to replace it all."
Potentially aware of such a view, the Tory IR35 meeting asked as its fourth question:
"What should be the legislative and/or regulatory scope of future changes to the off-payroll working regime?"
'Positive meeting'
For its third question, the IR35 policy meeting asked: "How have the 2017/2021 IR35 reforms and the current state of the regime affected the self-employed and the wider economy?"
"It was a positive meeting," reflects Ms Seeley Harris.
"Andrew Griffith MP and Gareth Davies MP were both very interested in….[the IR35 experts' answers and] opinions."
Charlie Hemsworth, of IR35 status advisory firm Bauer & Cottrell, also attended Mr Griffith's IR35 policy session.
'Positive step'
"It's a positive step that a parliamentarian is at least willing to listen, and the first time in quite some years that the Conservatives have sought direct input from experts in this way," Hemsworth told ContractorUK.
"However, this IR35 roundtable's objective, put forward by Andrew Griffith MP, was around encouraging more people back into self-employment. Unfortunately, the session only lasted an hour, and the scope of issues around OPW and IR35 is such that they could easily fill several hours of discussion."
'Tory IR35 policy meeting heard that off-payroll working rules are extremely onerous'
Bauer & Cottrell's director, Hemsworth explained that the "general view" at the meeting was "consistent" with what many contractor industry experts have argued for many years.
"The meeting heard that OPW is extremely onerous for both businesses and contractors, causes widespread confusion, and has produced a huge range of unintended consequences," she says.
"There was also discussion about the marked decline in self-employment across the economy and how this sits with the realities of modern working practices, both now and in the future."
'Both Conservatives appeared receptive to negative feedback about IR35's impact'
The IR35 status adviser continued: "Other important points were raised around the wider problems with the employment status framework and where OPW fits within it. And the Tory MPs appeared receptive to this feedback.
"But it's difficult to say what may come of the meeting, and we are in for a long wait as the next government change could be as far off as 2029.
"By then, employment status and the IR35 framework could look completely different [due to Labour's impending employment status consultation]. All we can do now is watch this space."
'Welcome recognition of off-payroll rules' complexity, but still a long way to go'
Andy Chamberlain, policy director of the Freelancer & Contractor Services Association (FCSA), attended last week's Tory IR35 policy roundtable too.
"It's positive to see the Conservative Party coming back to the table to discuss IR35 reform," Mr Chamberlain told ContractorUK, adding:
"There's a recognition there that the rules have always been overly complex and that the 2017 and 2021 changes have created problems for business and are an obstacle to growth.
"It was a good discussion, but there's still a long way to go. We look forward to working with all the political parties to bring about policy changes that will free up hiring and get the economy moving."
