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There was no mention of the IR35 reform to be rolled out in the private sector in the Autumn Budget announcement, but soon after the Chancellor concluded his speech, the red book disclosed that a consultation has been pencilled in to discuss whether the private sector roll-out should go ahead or not.

The controversial measure has drawn criticism from its stakeholders and IPSE, as the government intends to crack down on tax avoidance.

The government reformed Intermediaries Legislation, (also known as IR35) earlier this year for contractors working in the public sector. The Autumn Budget red book states that,

“Early indications are that public-sector compliance is increasing as a result, and therefore a possible next step would be to extend the reforms to the private sector, to ensure individuals who effectively work as employees are taxed as employees even if they choose to structure their work through a company.”

The document explains that in a bid to tackle non-compliance in the private sector, a consultation will be held which will take into account external research already commissioned by the government, which is due to be published in 2018.

IR35 Reform – What’s the Verdict?

Minutes from the July IR35 reform show that there were concerns over lower rates of pay for contractors working in the public sector.

“Members raised anecdotal suggestions that contractors are seeing lower pay rates when engaged by the public sector to reflect the additional tax cost to the public-sector engager, for example employers NIC and apprenticeship levy.”

A valid point raised by our Operations and Technical director, Craig McCall, states that,

“It is hard to see that Private Sector businesses that engage with the flexible workforce will respond to the changes in the same way as the Public Sector has, they are less likely to tolerate project delays or increased costs and more likely to change the contractual relationship or working practices of those that they engage with to minimise disruption to their operations.”

The full LinkedIn article which discusses the future of IR35, written by our Operations Director can be found here.

Gorilla Accounting is a specialist accountancy firm, exclusively for Contractors and Freelancers operating through a Limited or Umbrella Company.If you would like more information, get in touch with our New Business Team by calling 0330 024 0406 or email info@gorillaaccounting.com.

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