IR35 – Living with a Broken Promise

Well I guess it’s old news now, although it was quite foreseeable, but despite a pre-election promise the Conservatives have reneged on their commitment to review the IR35 legislation. Instead they will review the process for rolling the changes into the private sector – not the same thing at all.

Instead of me going over old ground, take a look at my previous IR35 post which was published prior to the election (and it’s broken promises).

In the weeks that have followed Twitter has been ablaze with tweets tagged with #IR35 – many are mine. There is a lot of anger out there and our worst fears, that end clients would take the ‘easy option’ and just stop using contractors altogether has come to pass (despite HMRC saying it wouldn’t).

Take a look at the site and you’ll see the extent of the problem that is unfolding.

Many contractors are being let go and the work is being farmed out overseas. Those clients choosing to keep their flexible workforce are either making blanket assessments that all roles are ‘Inside IR35’ (as they see it safer that way) or using the HMRC CEST tool with limited understanding on how to answer the questions it asks – this will normally result in an ‘Inside IR35’ determination.

Many will point at the CEST results and declare that most historic roles should have been deemed ‘Inside IR35’ so the system is working correctly and that we have all be fleecing the system for years.

There is no doubt that some contractors, knowingly or otherwise, have been operating on the wrong side of IR35 – it would be foolish of me to say otherwise. But why is it that whenever a minority are found to be bending or breaking the rules everyone has to suffer the consequences?

So where does that leave me?

Well, I guess I’m lucky in that I’m in the process of securing a role with a client that will be exempt from the changes – they are a start up and satisfy the ‘Small Business’ definition. This means that I’m responsible for making the IR35 determination. I’ve discussed this with the client and they am not an employee and that I’m providing a service via a business-to-business arrangement.

The project involves the development of a viable proof of concept and the contract will last 6 months.

Maybe the dust will have settled a bit by August 2020 and clients will realise that banning PSCs or imposing blanket ‘Inside IR35’ decisions isn’t working for them.

I’m sure that the government (small ‘g’ was deliberate!) won’t have changed their stance – they will more than likely spin whatever happens to their advantage, that’s what they do.

But it all comes down to this – what happens if, when this contract comes to an end, all the suitable roles are ‘Inside IR35’? What will I do then?

Well, it’s simple – if I cannot find an ‘Outside IR35’ role or secure a role with an exempt company, I’ll have to look for a permanent role instead and to close down my Personal Service Company.

I will not work ‘Inside IR35’ as a ‘No Rights Employee’ – period. It won’t happen, ever!

Dave Carson (On The Fence Development) January 2020

This would be a shame and frankly it makes little sense for the government (small ‘g’ is deliberate remember) to stand there and accept that.

I pay more tax as a contractor that I would as a permanent employee – many contractors are the same. So by forcing us out of business there will be an inevitable loss in revenue – where is the sense in that?

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