HMRC categorically state that IR35 plans for the public sector will not be applied to the private sector
Louise Rayner, CEO of NumberMill, attended an event hosted by HMRC yesterday, where HMRC presented on their plans with regard to IR35 in the public sector.
She has commented on the event:
“HMRC outlined their plans to introduce stricter compliance hurdles in the public sector from April 2017. A consultation will be held over summer 2016. HMRC described their plans for an on line tool to define if a worker could be paid as a director of his own Personal Service company.
“How the HMRC think that they can come up with an online tool that will give a contractor a definitive answer is highly questionable, when they haven't managed to successfully regulate using IR35 case law? It smacks of the previous Business Entity Tests that failed and were given up by the public sector. This with shortages in the public sector in teaching and healthcare just appears to be a public relations exercise, indeed HMRC said ‘we need to clean up our act in the public sector’.
“I asked HMRC what would happen if a worker who usually works in the private sector as a director of a PSC but failed the online test, would then have to be paid by the public sector as PAYE, however wouldn't be an employee. This seems extremely onerous, confusing and un-practical. Certainly HMRC were very unclear as to how this would work practically.
“I encourage everyone to get involved in the consultation, and hopefully they will give it up, as an impossible idea.
“Finally when asked if the plans were to overlay this in the private sector, HMRC said categorically NO!”