Recently, the government released a “Contractor Factsheet.” It is created to assist independent workers so that they can prepare for the upcoming changes in the IR35 legislation. The legislation will come into effect on 6th April. IR35 changes will make large and medium-scale companies in the private sector become responsible by setting the tax status of their engaged contractors.
A similar reform was introduced in the public sector in 2017. This legislation also moves the IR35 liability from the contactor to the fee-paying stakeholder in the supply chain—it is either going to be the recruitment agency or the end-client. The Factsheet, introduced a week after the IR35 review, provides an answer to these questions:
- What are the changes?
- Who does the reform apply to?
- What is the impact of IR35 impact on the contractors?
- What are the options available to the contractors before April 6th?
Although it is refreshing to see such support from the HMRC and government, the timing and content of the Factsheet have not been received positively. Here is why this guidance has come too late.
There is nothing wrong with the question pertaining to the timing of the Factsheet as there is nothing new in the guidance. So, what made the Government help the contractors so late when the reform is just around the corner?
The Factsheet is uploaded on the Government’s website. However, it is important that it is spread out to all the contractors who are expected to be affected by the IR35 reform. Since the reform is two months away, the Government has failed to extend a genuine helping hand to the independent workers. Although the document has reference to the Government website for additional information about IR35, the guidance itself is lightweight at best. It does not go deep into the reality of the public sector experience nor does it touches relevant issues such as the blanket IR35 determinations.
The Factsheet covers only two pages and specifies that the contractors “do not need to take any action before April.”It was the responsibility of the Government to explain a number of steps to the contractors so they were able to shield their IR35 status before the client assessment. Lastly, the Government also missed a good opportunity to recommend their IR35 tool, CEST.