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APSCo responds to leaked IR35 proposals

APSCo responded to the discussion document both in writing and via the IR35 Forum expressing grave concerns about the proposals which suggested that engagers (either employers or intermediaries) would be responsible – and therefore liable -  for deciding whether a contractor was subject to IR35 and forced to adopt the & lsquo;supervision, direction or control’ test.  

However HM Treasury sources are now leaking a new proposal that suggests the decision has already been made and propose that contractors will only be able to work for one or two months before the engager has to apply the supervision, direction, or control test – a test that APSCo feels is wholly inappropriate in isolation, and will disproportionately impact on highly regulated sectors such as financial services.

“These leaked proposals show a wilful disregard for the concerns raised in APSCo’s and other stakeholder responses” says Samantha Hurley, Head of External Relations & Compliance at APSCo who is a member of the IR35 Forum. – and who gave evidence to a House of Lords select committee on the use of Personal Services Companies ( PSCs) last year.

“The key here is the appropriateness of the status test, which will be used to decide if a contractor is genuinely self-employed for tax purposes.  One of the main recommendations that came out of the House of Lords Select Committee on PSCs was that HMRC should liaise more closely with the IR35 forum to ensure that proper engagement with business and relevant stakeholders was taking place before any decisions were made.”

“HMRC has NOT been liaising with the forum in the way that they have been told to – and in the way that they assured the House of Lords that they would.  In fact, we have seen a letter from David Gauke MP, Financial Secretary to the Treasury that suggests HMRC has made decisions around an online digital service apparently to & lsquo;help IR35 customers work out whether the rules apply to them.’ While this was mentioned in passing as an idea, there has been no real discussion or consultation.”

“We have already seen how disastrous the now defunct (at our recommendation) Business Entity Tests were in determining risk in relation to IR35, and without proper consultation with the business community, this tool is destined to go the same way.  Moreover, the consequences of an inappropriate status test could be devastating to the professional flexible labour market and UK plc.”

APSCo will continue to lobby government on the two key aspects of the leaked proposals. First, we will point to the public sector’s own six month rule as a good precedent for a more reasonable time period in which to determine a contractor’s employment status and second we would want to ensure that any online tool to assess status is fit for purpose and doesn’t go the way of the Business Entity Tests which were such a disaster in the hands of HMRC.”



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