Contractors should not be deemed ‘guilty until proven innocent’

As an extension of HM Revenue & Customs (HMRC) controversial new off-payroll rules into the private sector begins to look increasingly likely, a number of contracting bodies have spoken out against the proposed reforms.

Under existing proposals, HMRC intends to extend the new IR35 rules to the private sector in order to make businesses responsible for assessing the status of their personal service company (PSC) contractors and ensure that such contractors have been classified in the correct way.

HMRC has not yet indicated when the new rules could come into force, but most commentators suspect that it is aiming for April 2020.

Ever since the Government published a consultation document into the matter, however, a number of contractor bodies have spoken out against the proposals amid concerns that there were “several teething” problems with the implementation of very similar rules in the public sector back in April 2017.

Groups such as the Association of Independent Professionals and the Self Employed (IPSE) have warned that the proposed extension of the rules to the private sector could ‘strangle’ the living standards of many contracting professionals, for example.

Meanwhile, other commentators have suggested that HMRC has already proven that it is ‘incapable’ of policing such reforms, as evidenced by it’s much-criticised Check Employment Status for Tax (CEST) tool and a number of Tribunal challenges which have emerged in recent months.

On top of this, concerns have been raised by experts that it is simply unjust for the Revenue to manipulate IR35 legislation in such a way that contractors are effectively ‘considered guilty until proven innocent’ in terms of the ‘blanket approaches’ many public sector hirers have been incentivised to take towards IR35.

Among commentators, the general consensus appears to be that the controversial new IR35 rules prevent contractors from being able to secure a fair assessment, with complicated ‘deemed provision’ rules and blanket assessments increasingly placing them within IR35.