IR35 doesn't have to be a 'hammer blow'

 IR35 doesn't have to be a 'hammer blow'

Last week, BBC presenter Christa Ackroyd was hit with a backdated six-figure tax bill that might have made even the stoutest accountants gasp for air and widen their eyes in disbelief.

The, already, infamous case emerged after a tax tribunal ruled in favour of HMRC, finding Ackroyd had been working inside IR35 – despite offering her services ‘freelance’ through a “personal service company” in a move that would have positioned her outside of IR35.

In a candid interview with the Yorkshire Post, the longstanding broadcaster admitted that having her integrity questioned, being called a tax cheat and Googling herself, after the IR35 finding, made her cry.

Although the judge in the case said the BBC Look North Presenter could not be criticised – at the time, this kind of practise was common in the industry - Seb Maley, CEO at Qdos Contractor, told Recruitment Grapevine, that “the unique case potentially gives HMRC renewed confidence to go after people regarding IR35.”

Potentially, this means Ackroyd’s tears won’t be the last shed over IR35.

However, it’s not all bad news. Whilst Maley does think that the government will see the tribunal victory as vindication for their legislative reform, potentially increasing their appetite to pursue contentious cases, Maley doesn’t see the Ackroyd result as wholly negative.

“I think the positive [from this case] is that there will be an increased awareness, with both recruiters and employers more aware of the pitfalls. That said, whilst it does improve knowledge of tax risks and responsibilities, it shouldn’t mean that engagers [hiring clients and recruiters] knee-jerk react to it.”

For recruiters who help clients find contract workers, Maley is keen to assuage fears. “Many contractors are self-employed and it’s important that they continue working as such. The most important thing is, when you’re looking at someone’s tax, you do it on a case-by-case basis,” explains Maley.

Lambasting the blanket IR35 decisions taken in the public sector, Maley calls for recruiters to “prepare” for the “when not if” scenario of IR35 coming to the private sector. “Work should begin now because it’s a big job and they need to assess the impact of the type of worker they’re helping to engage.”

Maley continues: “The impact doesn’t have to be significant, ultimately the vast majority of workers should be able to work outside of IR35. It just takes a bit of time to understand IR35 and it’s history.”

Aware that too many parallels shouldn’t be drawn between the headline-case of Ackroyd and, say, an IT contractor, the CEO of the tax consultancy business is resolute when he says that “IR35 doesn’t have to be a problem.”

His key advice is that recruiters and employers look at the individual, get a grasp on how their sector works – “nurses will have a different situation to an IT contractor” – and stay “educated and reasonable.”

“It doesn’t have to be a hammer blow. Genuinely self-employed people can stay working like this. It will cause a bit of disruption but over the years there have been many doom mongers. Change, adapt, stay educated and stay reasonable.”

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Comments (1)

  • Tom Elliott
    Tom Elliott
    Tue, 27 Feb 2018 12:13pm GMT
    It's only a matter of time before all contract assignments will be deemed inside IR35 and subject to the correct tax deductions. Anyone familiar with 'chain law' in the Netherlands will appreciate how it will unfold.

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