The new IR35 has been rolled out, for better or worse, as of April 6th, 2021. As contractors batten down the hatches for a stormy year, the MPs who were all right with rolling out this piece of tax law are being roundly complained about by all parties who are affected by the faulty IR35 rules.
The Loan Charge All-Party Parliamentary Group has published an inquiry about how contracting should work, which exposes real risks associated with non-compliance in the supply chain. This group argues that the changes that are now being forced on the private sector exploit contractors and make a mess of a very important part of the UK’s economy and workforce.
The report clearly shows that the so-called disguised employees being pursued were little more than contractors who were just working through their own PSCs. These same contractors are now being forced to work through umbrellas and suffer under the yoke of blanket bans.
Transparency and Regulation Called For
The report showed the general lack of transparency regarding fees and deductions. It also highlights how employers’ tax deductions from contractors’ pay are problematic if they are not being paid correctly in the first place or are not being allowed to access these benefits. The report makes it clear that malpractice in the supply chain by intermediaries and umbrellas will cause more damage than any other change that has been forced on contractors over the past year.
Many have likened the practices that are being forced upon contractors as akin to the Wild West with its lack of organized outlines and rules. The government has been called upon again and again to address these issues with little success.
The supply chain should not be opaque, but it continues to be so, leading to a real feeling of insecurity on the parts of everyone involved in the supply chain and contractors as a whole. It is wondered why the government was so concerned about supposed tax avoidance schemes and then has continued to neglect and ignore contractor requests for a fair and reliable means of being taxes.
This legislation needs further review, and significant fixes should be applied. If there are still contractors left by the time the necessity of the fixes that must be done is realized by the government, it can be hoped that they will address all of the concerns that contractors have for once and for all.
For many contractors, there is no way to make their jobs work in this new reality that is fraught with unreliable rulings by HMRC, incorrect information being dispensed by the government, and a lack of access to rights that they are paying for with their taxes.
