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Treasury Select Committee to publish ARC critique of controversial IR35 rules

On 27th March, the Association of Recruitment Consultancies (ARC) reported that it had written to all MPs concerning the new IR35 public sector rules, heavily criticising the measures. ARC now reports that the Treasury Select Committee is due to publish the letter as evidence in respect of controversial aspects contained in the Finance Bill 2017.


Adrian Marlowe (pictured), chairman of ARC, commented, “Our intention as we reported in March was to ensure that MPs recognised the problems we identified, not only in relation to the new online tool but also in respect of some fundamental points of principle.


“The approach taken by HMRC and the Treasury in taxing self employed contractors in the way set out, increasing tax levels, imposing administrative and cost burdens on already hard pressed public authorities, confusing employment income with company invoices, and introducing consequent VAT anomalies, is not the correct way to address IR35 tax avoidance perceived by HMRC or public sector off payroll arrangements. We asked MPs to seek removal of the measures from the Finance Bill and for a wholesale review to be undertaken.


“Today I have been told by a representative of the Treasury Select Committee that the Committee had planned to use our letter as evidence in a formal enquiry concerning controversial aspects of the Finance Bill. However because of the election announcement that enquiry is not now proceeding. All the same, the Committee will publish ARC’s letter as evidence for MPs to consider when reviewing this aspect of the Finance Bill next week.”


The new IR35 rules are proposed in the Finance Bill to be included as Chapter 10 ITEPA 2003. ARC is informed that the Bill is due for a final reading in the House of Commons next Tuesday 25th April. 


Marlowe concluded, “We welcome the Select Committee’s action. We have done everything in our power to draw this issue to the attention of our elected representatives. It is now up to them whether to exclude the measures out or not. I sincerely hope that a positive result emerges not least given the precedent that the measures, if allowed to proceed, could set for the private sector, and ultimately the principle of flexibility in the UK labour market."


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