N. Sea contractors urged to stay calm over HMRC self-employed IR35 tax reforms

As N. Sea oil and gas service companies and contractors gear up for a potential announcement in this month’s Budget on the future of IR35 in the private sector, Qdos Contractor  has moved to quash speculation that incoming changes cannot be handled.

It is predicted the responsibility for setting the employment status of contractors working in the private sector will be handed to the companies which engage them, similar to recent reform in the public sector.

It is a move which would see private sector companies liable for any missing tax, should they be found to have set a contractor’s IR35 status incorrectly following an investigation by HMRC.

APSCo research indicated that 78% of recruiters believe extending rules to the private sector would impact the UK’s ability to source flexible labour.

However, since April, the month of recent public sector IR35 reform, Qdos Contractor revealed 89% of contractors passed their rigorous and detailed IR35 contract and working practice assessments, and were able to continue working outside the rules.

Qdos Contractor research into 652 UK contractors highlighted:

  • 63% believe private sector changes could be managed
  • 61% feel that despite recent tax changes, including public sector reform, the independent workforce will continue to grow

Introduced in 2000, IR35 aims to combat tax avoidance, targeting people working through their own limited companies or partnerships who are considered in the eyes of HMRC to be ‘disguised employees’, and not paying the tax they should be. Among those found to be abusing their IR35 tax status was John Birt, former chairman of the BBC.

Seb Maley, Qdos Contractor’s chief executive, called for calm and urged oil and gas companies to take the initiative should expected IR35 changes be announced in the Budget this month.

He said: “Despite understandable concerns from private sector companies, likely changes to IR35 can in fact be managed, and oil and gas companies will be able to continue engaging contractors. We must however use the public sector as a roadmap for managing expected reform in the private sector.

“Working with many public sector companies and recruitment agencies, our solution has allowed for the continued use of contractors. Should potential changes resemble public sector reform, we have a proven method to determine IR35 status accurately for Oil & Gas companies.

“Up to 85% of contractors rightly do not trust HMRC’s CEST Tool to make accurate determinations, and assessments must be carried out by unbiased IR35 experts on a case-by-case basis.”

“Preparation is key, and contractors and agencies must now take the initiative by opening discussions with the workers they place, and begin to think about how they will contribute to well-informed IR35 decisions. The cost of blanket and inaccurate IR35 decisions in the sector would ultimately be huge to the industry.”

15 Nov 2017

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