The policy director of the Association of Professional Staffing Companies is calling for changes to be made to the off payroll working rules.
APSCo’s Tania Bowers says there is a need to introduce an “offset mechanism” into the IR35 rules, to ensure “double taxation” isn’t unfairly impacting recruitment agencies.
‘HMRC consultation on IR35 offset issue’
Bowers also says her expectation based on meetings with the Revenue is that news of a “possible consultation” on the IR35 offset issue will be unveiled shortly; “in [the] Spring”.
Reviews of IR35 or affecting employment status have been so numerous of late, that some industry experts say there is no longer any point contributing.
The consensus is that the government does not listen to the recommendations provided; it fails to implement them – or it just takes too long to reply to the recommendations.
‘Off-payroll exacerbating skills shortages’
But APSCo says the off-payroll frameworks of April 6th 2017 and 2021 are now ‘exacerbating the shortage of skilled professionals.’
The warning is in line with demand for IT contractors in March 2023 falling flat, following a Spring Budget by the chancellor which has been attacked for not helping the hiring sector.
‘IR35 reform needs amending’
So revised IR35 “needs to be amended,” mainly on the offset issue, but also to “accommodate the different requirements of highly skilled contractors”, says the association’s CEO Ann Swain.
APSCo’s call comes after three ideas to “minimise” damage by the off-payroll rules were tabled, in wake of contractors still regarding IR35 as the biggest threat to their business.
‘IR35 rules having detrimental impact’
APSCo’s stance is similar, because while it says the IR35 offset consultation may emerge soon, “we stand by our view that off-payroll itself is having a detrimental impact”.
IPSE stated “The Association of Professional Staffing Companies are absolutely right to point out the continued negative impact of the off-payroll rules,”
“We agree that progress on the off-set issue is urgently needed, but more than that, government must stand back and consider the damage that the legislation is causing to our smallest businesses, and the UK economy as a whole.”
‘Ridiculously aggressive tax policies made me quit contracting’
APSCo says the damage includes HMRC taxing the same income twice, partly why “many” skilled professionals, not wanting to change how they work, have quit contracting altogether.
“Today is my last day as a freelancer, and I start my first permanent role after the…weekend for the first time since 2015 — about eight years ago,” says a now-retired UX Design contractor.
“Eight years is a long haul in freelancing terms…not far off a decade living gig-to-gig, on 0-5 days’ notice, with no sick pay, no holidays, nothing.
“I have loved being a freelancer. If it hadn’t been for the UK’s ridiculously aggressive tax policies [including IR35], I’d still be doing it.”
The former contractor is proof that the IR35 review sought by APSCo should have only one outcome, according to Andy Chamberlain, policy director at the Association of Independent Professionals and the Self-Employed (IPSE).
“If the government is serious about increasing labour market participation and delivering growth,” he says, “it should start by getting rid of the off-payroll working rules.”
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