By Jonathan London on 12th August 2015

APSCo hits out at potentially disastrous IR35 reform plans

The Association of Professional Staffing Companies (APSCo) has issued a stern warning over the potentially serious impact that planned reforms to IR35 regulations could have on UK contractors.

Reacting to a recent HM Revenue and Customs (HMRC) discussion document outlining proposals to overhaul existing IR35 legislation, the industry body has raised concerns that the plans could have a “devastating effect” on the UK professional flexible recruitment market.

Announced last month, the ideas include making administrative changes to the operation of IR35 – a system of regulations designed to ensure so-called ‘disguised employment’ is taxed at a rate similar to traditional employment – as well as improving HMRC’s compliance response and reforming the test for whether IR35 applies.

However, the APSCo has singled out one particular measure –  the idea of asking engagers such as end clients or recruitment firms to take a proactive role in ensuring the right amount of taxes are paid – as being particularly harmful.

Samantha Hurley, head of external relations and compliance for APSCo, noted that this would result in cases where engagers might decide that a worker should not be subject to IR35, but HMRC subsequently overturns this, making the professional liable for outstanding employment taxes or National Insurance contributions.

This would create commercial risks for those in this position, potentially leading to a greater sense of caution, an increase in false employment and an upward pressure on rates as contractors look to recoup lost income, while skills may even be lost to other countries.

Moreover, contractors operating through this model would have no employment protection rights or certainty in terms of work continuity, thus making it harder for them to make a success of themselves in the UK.

Ms Hurley: “We are already working on a contact list of parliamentarians and end client stakeholders and are also organising collaboration with other recruitment, accounting, contractor and end client stakeholders to work on joint activity with meetings due to be held before the end of August.”

Jonathan London Written by Jonathan London

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