Where is HMRC’s online tool?
Unless you are new to these pages you will already be well aware the way IR35 works in the public sector is changing. You will also be aware that we at IPSE have been warning for some time of the chaos this measure will cause in the public sector. Throughout the consultation period and beyond, HMRC have shrugged off our concerns by saying it will produce an online tool which will assuage these problems.
In October we wrote about our concerns around HMRC’s online tool. What we didn’t think back then was that the tool, now renamed as the ‘Employment Status Service’, still wouldn’t be available at the beginning of March. So now we have two problems:
Problem 1 – Contractors are, quite reasonably, refusing to work until the tax treatment of payment for that work, which is likely to be made after the 6th April deadline, is made clear. But their clients and agencies feel unable to provide that clarity because they are waiting on the tool.
Problem 2 – When the tool is made available, there will be no time to point out any flaws in it. So unless it’s perfect, thousands of engagements will be assessed inaccurately.
It is absolutely unacceptable that the tool isn’t available yet. We last heard it would be available today or tomorrow – but even if it is, this is disastrously late. We still have big doubts over how well it will work, but the fact that it’s not available at all is leading to public sector bodies declaring that all engagements are inside IR35, without doing any kind of assessment. And that is leading to contractors walking out.
As for the tool itself, IPSE has seen a few different test versions. We are also aware others have been testing it and there are bewilderingly differing views on its effectiveness. Some are saying it is impossible to get it to provide an ‘IR35-pass’. Others are saying the exact opposite – that no matter what they enter into it, it churns out an ‘IR35 does not apply’ determination. Perhaps the conclusion is there are different versions of the tool floating around out there, which of course, would make assessing how accurate it is impossible.
It looks like we’ll have to wait and see what we think of the tool once it’s finally published – and that will be too late. Clients and agencies will immediately pounce on the tool as soon as it’s made available. They are desperate to bring some clarity to this chaotic situation – which, by the way, is entirely of the Government’s own making. If the tool is flawed, it will undermine the whole enterprise, and there will be no time to amend it because the Government has waited until the eleventh hour to publish it.
IR35 is already a complete mess. It’s complex, unfair and deeply unpopular. This change does nothing to address those criticisms. The absence of the digital tool is the icing on the cake. It makes bad situation even worse.
Tax, Policy, ir35