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IMA: Red Book statement on contractors could undermine UK competitiveness

IMA: Red Book statement on contractors could undermine UK competitiveness

Alongside last week's Budget, the Treasury published a statement in the accompanying 'Red Book' on personal service companies, which many interim managers operate through.

In addition to a package of measures designed to improve the administration of IR35, the Government has pledged to bring forward a consultation on 'requiring office holders/controlling persons who are integral to the running of an organisation to have PAYE and NICs deducted at source by the organisation by which they are engaged.' This approach could threaten organisations' ability to bring in highly skilled interims to meet business needs.

The consultation is currently being prepared by HMRC, and fits into the context of the Government's review of interims and contractors in the public sector, following the high profile Ed Lester case.

Commenting on the proposal, Jason Atkinson, Chair of the Interim Management Association, said:"Interims are at the heart of this matter, and outcomes from the consultation could - potentially - be very damaging to the sector we're yet to see.

"I am all for naming and shaming those who do deliberately avoid tax, but this is not what interim management stands for. Interim managers bring a unique set of skills to an organisation, they are independent and flexible, and can be turned on and off to suit requirements. Forcing them on to the payroll could prove disastrous for all parties concerned. Doing so will not only damage the productivity of organisations who rely on the skills of contractors, but it could also seriously undermine the competitiveness of the UK's flexible labour market. The IMA's quarterly IPSOS Mori survey indicates that the interim management industry is worth &pound1.5 billion. It is essential for organisations (public and private sector) to have access to this talent, as we work towards economic recovery.

"The IR35 Forum, which the IMA's parent body - the REC - sits on, has worked extremely hard in the past year to improve the administration of IR35, a tax rule whose uncertainty causes many concerns among legitimate interim managers and contractors. Bringing forward new legislation in this area risks replicating this uncertainty."

Gillian Econopouly, REC Head of Policy, added: “The REC is tapped into Government on this critical issue through the IR35 Forum and other regulatory links. We will work with our members, including the Interim Management Association (IMA), to challenge these proposals head on, and build coalitions with like-minded organisations in this space. The interim market is too valuable to UK plc to do otherwise.”


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