MAY IR35 FORUM KEY FINDINGS PUBLISHED blog image 19/07/2018

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May IR35 Forum key findings published

Improving the way IR35 is administrated, HM Revenue and Customs (HMRC) continue to work with the IR35 Forum. A summary of May’s minutes can be seen below:

Compliance has improved

Following the reform of IR35 in the public sector in April 2017, as a result, compliance has improved. HMRC provided the supporting evidence:

“In the first 10 months (since reform) an additional 90,000 engagements have been registered on Real Time Information (RTI) equating to 58,000 individuals paying income tax and NICs.”

At estimate, since the public sector IR35 reforms was introduced, an additional £410m of income tax and National Insurance Contributions (NICs) have been remitted. Figures from HMRC’s annual report for 2017-18 is largely in line with Treasury’s initial forecast.

Check Employment Status for Tax (CEST) 

Usage of CEST has steadied at around 40,000 – 50,000 per month. The determinations according to HMRC are matching similar tools in the private sector, by finding 60% self-employed and 40% employed. However, the employed ratio is much higher.

Sector- specific data

HMRC does not have data relating to sectors on the IR35 reform issues. Although they will investigate whether it is possible to find out if there are issues relevant to some sectors.

Institute of Chartered Accountants in England and Wales (ICAEW) concerns

The department has agreed to work with the ICAEW, to improve guidance on existing rules about the public sector IR35 legislation.

Employment agencies and umbrella companies

In relation to tax, the department is “exploring the feasibility” of setting out standards and expectations of employment agencies and umbrella companies. Tax officials will report back to the next Forum meeting about whether this can be taken forward.

Further examples

Draft examples of exceptions and exemptions, especially on outsourced services, was shared with Forum members. The examples will be reinstated on the gov.uk website once they have been agreed.

Online

  • The new terms of the reconstituted IR35 Form have been published on the forum’s website.
  • The department’s Mutuality of obligation (MOO) Paper (published since these minutes) is subject to HMRC’s consideration following feedback received from members.
  • Despite suggesting that members’ feedback would be factored in to the final draft of the MOO paper, many IR35 Forum members have distanced themselves from the paper since publication on the forum’s website. No (external) members appear to have spoken up to endorse it.

HMRC has offered a round table event for IR35 Forum members to respond to the private sector IR35 reform consultation. The next IR35 Forum meeting is also scheduled for August 2nd 2018.

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