The Off-Payroll Working reforms have courted the limelight since their introduction to the private sector in 2021.
For contractors, relinquishing status determination control has been a challenge, especially given the cautious response taken by end-hirers. Horror stories from the public sector regarding multi-million-pound fines and penalties for incorrect determinations have only served to cement caution from private sector businesses.
Many limited company contractors have subsequently found themselves with no option but to convert to PAYE solutions to continue contracting.
But what next for IR35 and contractors looking to provide services via their own company?
Will a General Election have a bearing on IR35?
2024 is likely to bring a General Election with the main parties looking for opportunities to sway voters in their favour, so stakeholders involved in the UK temporary labour sector will likely continue to lobby IR35 as an issue for consideration.
Recent comments by Former Lord Chancellor and South Swindon MP Robert Buckland, who stated that “IR35 had become somewhat of a Frankenstein's monster” and “that there is no better time to slay it once and for all.” confirm this.
While we can't see a repeat of any repeal at the next general election, the desire to stimulate the economy and business growth may see a sympathetic view taken toward legislation such as IR35. For now, though, the jury is still well and truly out.
IR35 double taxation issue being addressed?
News that HMRC is looking into addressing the double taxation issue that has blighted the legislation since the 2017 public sector reforms was welcomed recently.
The ability to offset any taxes and national insurance already paid by the contractor against any fines or penalties for an incorrect determination is a sign that HMRC recognises that the legislation has flaws.
A change of this nature could alleviate some of the concerns and caution currently held by private sector businesses and improve confidence in engaging “outside IR35” contractors.
CEST 2.0 to help IR35 status determination accuracy.
Updates to HMRC's CEST (Check Employment Status for Tax) tool have been released recently, again supporting the view that HMRC intends to persevere with the IR35 legislation.
The changes aimed at helping end-hirers and contractors make better, more accurate status determinations could help raise the confidence of businesses looking to engage contractors operating their own limited companies.
IR35 changes to promote end-hirer confidence?
Contractors may lament the news that IR35 is likely to stay; however, the signs and actions of HMRC intimate an intention to make things a little easier for businesses looking to hire contractors.
Suppose these actions do indeed have a positive effect on end-hirer confidence. In that case, contractors can look forward to a more buoyant market and better opportunities to promote and build their businesses.
For more information, contact the Champion Contractors team on 0161 703 2549 or email info@championcontractors.co.uk.
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