What are IR35 changes and how will your business be affected?
6 November 2017
Julia Kermode, Chief Executive, Freelancer & Contractor Services Association
Is your business among the many millions that use services of interims, consultants, contractors or other non-permanent staff? If so, then you need to know about changes to IR35 regulations which could have a serious impact on how you do business. Tax reforms were introduced in April 2017 which are specific for the public sector, and it is increasingly likely that the changes will be rolled out to the private sector, affecting all businesses operating in the UK.
23% of the UK’s workforce has chosen to work contingently and these reforms are having a devastating impact on public sector services as the flexibility of this economically important workforce has been significantly reduced for all parties.
Implementation of the changes has not gone well. There has been a considerable increase in red tape, time and resources for businesses to administer the change, as they grapple with complex legislation that previously has not affected them. We have seen an increase in the cost of the contingent workforce without increased productivity, we have seen people leaving the public sector resulting in skills shortages, we have seen peoples’ income reduce drastically, and we have seen dubious tax avoidance schemes becoming increasingly prevalent as they target those individuals affected. We have seen projects going on hold as the public sector grapples with skills shortages; just recently Transport for London announced that repairs to London’s Underground system will be delayed because a mass exodus of contractors has left TfL without sufficient staff resources to complete the work.
We expect that IR35 changes will be rolled out to the private sector which will mean that 5.5 million businesses will be affected, in addition to over 50,000 public sector bodies already affected. In essence, HMRC will be delegating its enforcement role to businesses which is not only fundamentally wrong but also unnecessary if HMRC properly implemented its existing powers.
IR35 changes are unfairly penalising UK businesses, is yours one of them? Read more here.