Great result for APSCo as Select Committee evidence contributes to possible IR35 review
The report, published today, concludes that there is a general lack of information of how widespread the use of PSCs is and that this is due in no small part to the absence of reliable information collected by HMRC. The report also says that HMRC has failed to demonstrate that they have a sound basis for the £550m of tax that they cite as being at risk if IR35 were to be abolished or suspended.
Commenting on the report, Sam Hurley said, “This is a really good result and we welcome the recommendations made by the committee. During the enquiry I was asked to give evidence on the guidance provided by HMRC on IR35 and pointed out that we had very real concerns regarding the misuse of the Business Entity tests which were being utilised by some public sector departments to define an individual’s employment status for tax purposes.”
“We therefore particularly welcome the call for the revision of the Business Entity Tests – an issue the IR35 Forum is currently looking at - and the recommendation that further measures should be taken to build confidence in the public sectors’ management of off payroll workers. Certainly our members would welcome a more consistent approach. We were also very pleased by the recommendation that HMRC should be tasked with publishing a more detailed assessment of their £550m at risk figure.”
“One of the questions I was asked at the enquiry related to the effect of the Agency Workers’ Regulations and why this has caused an increase in the use of PSCs. I explained not only the very clear distinction between the highly skilled/highly paid contractor and the lower paid/lower skilled worker but also the fact that professional contractors – who are in business on their own account – neither want nor seek the employment related protections afforded by such legislation. We were extremely pleased therefore that the report acknowledged that while there has been an increase in the use of PSCs, that this was actually due to a number of different factors – including the growth of the flexible labour market - and that this isn’t necessarily a bad thing. This is a really refreshing view, given that the growth of PSCs is often talked about in pejorative rather than positive terms.”
“Finally, although not relevant to the professional recruitment sector, we also welcome the suggestion that the use of PSCs for lower paid workers – who may not either understand the consequences – or be given a choice about such a decision – should be looked into more closely and that the Government should produce a short guide setting out the differences between employment and self-employment. We have indicated that APSCo would be more than willing to help the Government in producing such guidance either through the IR35 Forum or directly.”
“This is a great result for APSCo and shows just how much can be achieved when stakeholders agree to engage with an open mind.”