HMRC ‘learning the lessons’ of reforming IR35

The taxman let on to the latest IR35 Forum meeting that he's 'learning the lessons' of reforming IR35, firming-up the prospect that he wants to have another, better go at changing it.

So no doubt stoking the fears of those who think that extending the public sector’s IR35 reforms to the private sector is already a ‘done deal,’ HMRC cited “one of the lessons” it is learning.

It is this: that the April 2017 reforms have been implemented ‘more successfully’ at organisations where an employee has been made responsible for bedding-in the changes.

'Lessons'

Although HMRC did not go on to share the other “lessons" of the reform (or where it will apply them), the department's disclosure gives rise to a client-worker being made an ‘off-payroll officer.’

Or at the least, similar appointees at end-users who engage freelancers who use limited companies would make for a more successful implementation -- in HMRC’s eyes -- of a private sector off-payroll framework.

The Revenue's minutes say: "One of the lessons of the reform...[is] that where an organisation was able to nominate one person with responsibility for implementing the reform, the implementation was more successful."

'Completed'

Elsewhere at the February meeting of the IR35 Forum, there must have been a sense that HMRC already has enough to contend with, quite apart from overseeing a full-scale, private sector roll-out.

In fact, out of nine ‘Action Points’ agreed at the IR35 Forum’s December meeting, the minutes for the February meeting show only one is “Completed.”

Other actions HMRC agreed to take are “Carried forward to next meeting” or still “On agenda.” Meanwhile some appear to have been addressed albeit in a curtailed way, like Action Point 4.

'Same as usual'

It says that HMRC was going to review its guidance on reclaiming NICs where the IR35 status decision (about the freelancer limited company, but by the client) is challenged (by HMRC) in the SA tax return.

“The NIC repayment process is the same as the usual process,” a briefer than expected HMRC update says. “The individual should ask the engager if in-year, if not then they need to make a claim in the prescribed format.”

A host of other HMRC Action Points (APs), specifically new ones tabled at the February meeting, should have been completed by now or, as the minutes state, “by end March.”

NI, CEST and MOO

They include; HMRC circulating both a hyperlink to content on making a NI reclaim and a technical paper by HMRC on Mutuality of Obligation in relation to the CEST tool.

Promised by HMRC amid criticism that CEST fails to test for MOO (because it is already assumed to be present), the technical paper was outlined at the February meeting under four broad areas.

However, the forum's industry members replied by raising almost twice as many of their own areas around Mutuality, saying these needed covering by the paper too. HMRC agreed it would.

Circulation of members’ comments in response to the paper is among the APs scheduled for 'end of March' completion, after which the paper will likely be uploaded to the IR35 Forum website.

 

6th April 2018

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