IR35 is here to stay, at least for the time being

Contractor accountants were probably disappointed to learn that IR35 is to remain with us for the time being.

The MD of Brookson, Martin Hesketh, said he did not expect people to see any difference in the onerous regulation even though the Chancellor said the complex rule would be simplified and its administration improved.

The government has decided that it needs the revenue that IR35 generates but to placate those who are subjected to it, a dedicated helpline of experts is going to be set up. However, contractor accountants will continue to have a big part to play in advising clients on whether it affects them.

Hesketh went on to point out that removing IR35 without implementing a suitable alternative could lead to contractors suffering an even worse fate.

The REC is less convinced, saying the Chancellor missed an opportunity for real, tangible simplification that would have benefitted entrepreneurs throughout the UK. A dedicated helpline is no substitute for real reform. The REC spokesperson went on to say that there are no clear figures showing the amount of income generated by IR35, so it is hard to accept the government’s statement that substantial revenue will be lost. Further consultation should have been called for so the Treasury could weigh up different options.

A former HMRC tax inspector said effective guidance and restricting reviews to high risk cases will provide much needed clarity and certainty.

A new forum is going to be set up to monitor the way HMRC manages the improvements, but only time will tell whether the Chancellor’s decision was the right one.

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