IR35 – On The Fence Development

That’s All Folks – I’m Out!

TLDR; I’m another statistic – IR35 and the Covid-19 outbreak have forced me into a position where I have to close down my contracting company and seek alternative employment.

Well, that’s that! Today I instructed my accountant to ‘Pull the Pin’ on my company and start the process of winding it up. A sad but somehow inevitable day for me – I’ve seen it coming for a month or so but it’s not easy being here now.

I’ve been contracting through my limited company for the last 9 years and in the time I have worked on numerous projects across numerous sectors – an experience that has, I believe, left me a better developer that I would otherwise had been. I have no regrets – none!

But a combination of unfair an tax legislation and a worldwide pandemic have left me in an untenable situation – while the company might (just might) survive the Covid-19 Lockdown the specter of IR35 looms large on the horizon and I’d rather take a different fork in the road instead of heading into more uncertainty.

IR35 – Delayed; but not forgotten

Yesterday (17th March 2020) the Government announced that they would be postponing the rollout of IR35 changes into the private sector due to the Coronavirus outbreak.

Despite the Minister referring to ‘off roll payroll working rules‘ (maybe indicating that he has no real idea what they are) he confirms that the changes will be tabled again ready for implementation in April 2021.

This comes far too late for many genuine contractors and associated services such as accountants who have had to close their businesses down as clients imposed blanket bans or ‘Inside’ determinations requiring the engagement of Umbrella companies and significant reductions in income.

It also comes the day after HMRC provided evidence to the House of Lords and were found seriously wanting in their response to scrutiny. While the House of Lords cannot force Government to defer the bill we have to hope that this contributed to the decision to pause the rollout (regardless of what they say).

IR35 and the Implosion of the Contracting Market

When I checked Twitter this morning my heart sank – I was watching the new Chancellor (Rishi Sunak) regurgitate the HMRC view of IR35 and the changes to be rolled out into the private sector in April.

He was essentially announcing the Death Knell of Flexible Working as we know it – the contract market will shortly implode even further than it already has.

We, the contracting community had hoped that the fresh faced minister would pause the roll-out and call for the review that was promised ahead of Decembers election.

Instead he stated “it’s not fair to all the people who is employed that someone else who is doing the same job is paying less tax” – the cornerstone of the HMRC argument for making the changes.

On the face of it that may be a reasonable stance to take – but they are not comparing apples with apples here (and they damn well know it).

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 OffPayroll.org.uk site and you’ll see the extent of the problem that is unfolding.

IR35 2020 – Thoughts from the Coal Face

I’ve been contracting for over eight years now and in that time I’ve been careful to ensure that, to the best of my abilites, I operate in a manner that places me outside of the IR35 legislation. That is, to provide a service to my clients and not to be seen as an employee.

Currently it is my responsibility to determine the employment status of a role with regards IR35. I do this by having contracts independantly reviewed to ensure that they comply with the legislation and take steps to ensure that the actual working conditions are in accordance with service provision rather than employment.

If I get it wrong then it is down to me to justify my determination, in court if need be, and pay any unpaid taxes should I be unable to do so.

However, in April 2020 that determination could largely be taken out of my hands and placed in those of the fee payer, e.g. the client if I’ve been engaged directly or otherwise a recruitment agency that have facilited the engagement.

HMRC have decided to make this change stating their belief that most contractors are incorrectly self-declaring themselves as being outside of IR35 and avoiding paying the correct level of tax.

They have not been able to substantiate these claims, despite repeated calls to do so – but that’s not the reason for this post.