Freelancers' Questions: Is sector-specific IR35 guidance the way to go?

Freelancer’s Question: How can a special version of IR35 guidance or testing be ‘waiting in the wings’ for the BBC and other broadcasters, without other versions for other sectors likely to follow? Surely every commercial engager will need their own status materials specific to their organisational-type if the reported talks end up producing new guidance. Does anyone think this is the right way to go?

Expert’s Answer: In one obvious way, what’s apparently mooted according to a ‘person close to the talks’ represents a bit of back-peddling from HMRC. That’s because the reform was supposed to see no intervention from HMRC in the IR35 decision-making process  -- at least in the public sector. The Revenue said it would merely help public sector bodies to come to the right decision.

All that said, I’m of the opinion that this cannot really be achieved unless HMRC fully understands the working practices in an organisation.

So the news that HMRC is working with the BBC, especially in light of recent high-profile cases which were won by HMRC but which exposed real flaws (notably the mismatch between tax and employment law which has required proposed new legislation to look at bringing the two together), is arguably the right and proper course of action.

Actually, I’d like to see the same assistance from HMRC be provided to two more very diverse industries -- locum doctoring and HGV driving. In these two roles, freelancers can personally suffer dire consequences and even criminal prosecution for negligent actions on their part.

These repercussions cannot be indicative of ‘employed’ workers, yet they are often classified as such, simply because in both professions, they tend to operate very expensive machinery which is the property of the hirer. This should be discounted as a factor in certain industries in my opinion, thereby allowing other factors, such as a lack of Mutuality of Obligation, to be much more of a consideration. More from the Revenue on Mutuality, and potentially a wider insight into how HMRC is thinking, is scheduled to be the subject of an (overdue) unveiling of a paper by the tax department, by the end of next month.

The expert was former tax inspector Carolyn Walsh, managing director of Andraste Accounting.

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