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House of Lords select committee launches IR35 inquiry

The House of Lords Finance Bill Sub-Committee is to launch an inquiry into the extension of the off-payroll working rules into the private sector (IR35). The committee is inviting contributions to its inquiry before 25th February.

The inquiry will cover the existing measures in the public sector, the impact of the rules on organisations, determining the tax status of workers and the policy objectives.

Lord Forsyth of Drumlean, chair of the finance bill sub-committee, said, "The Government is proposing to extend the off-payroll working rules to large and medium-sized organisations in the private sector. We are interested in how this change will work in practice, and how it relatesto wider changes in working arrangements.

"To inform our work we want to hear from as broad a range of people and organisations as possible. If you have a view on off-payroll working rules, please let us know what you think."

Julia Kermode, chief executive of the Freelancer & Contractor Services Association, commented, “It is fantastic that the Lords has listened to our lobbying and has announced an investigation into the extension of off-payroll working rules. The investigation will consider a wide range of issues, so it’s essential that anyone with a view gets involved and uses the opportunity to influence those in power. We have long been extremely concerned about the proliferation of tax avoidance schemes as a direct consequence of this flawed legislation, with numerous schemes targeting contractors whilst purporting to be a compliant umbrella when they are in fact anything but. 

“The government failed to deliver on their commitment to regulate umbrella from April 2020, and without this regulation these schemes will continue unchecked on an industrial scale. This means that thousands of contractors will be unwittingly duped into these schemes, which is already happening, and they will be personally liable to pay a very large tax bill when HMRC catches up with them. We have always said that the off-payroll rules cannot be extended to the private sector until the government is able to deal with the resulting avoidance schemes, and we will be telling the Lords exactly that. It is outrageous that such a serious consequence of the public sector changes has not been properly addressed and it is essential that off-payroll changes are delayed until sufficient measures have been taken to protect workers from these aggressive and exploitative schemes.”

Picture courtesy of Pixabay

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