ContractorCalculator’s IR35 campaign reached Parliament this week, as HMRC faced questions over criticisms of the Check Employment Status for Tax (CEST) tool from the BBC director-general and ContractorCalculator at a Public Accounts Committee (PAC) meeting.
PAC chair, Meg Hillier, quizzed HMRC’s head of tax Jim Harra, about CEST’s inadequacies, following lobbying efforts from ContractorCalculator and its readership.
Congratulations to all who helped push HMRC’s botched public sector IR35 reforms into the Parliamentary discourse. Having the campaign addressed at PAC is a great milestone, and goes to show that sustained and intense lobbying could genuinely help bring around positive change.
HMRC’s predictable responses add fuel to the fire
It’s disappointing that Harra responded in such predictable fashion when pressed on why ContractorCalculator had accused CEST of producing unreliable results. Harra’s first reply was to highlight that we have our own IR35 assessment tool, as he has done in the past.
Many firms have IR35 tools and assessment processes. Ours is just one of these solutions developed to ensure that contractors receive fair tax treatment. Following nine years of continuous development, we are able to do exactly that. CEST is not.
Reducing our campaigning efforts to nothing more than a smear is disrespectful, especially considering the wealth of evidence that we hold, proving that CEST is not fit for purpose.
The longer HMRC continues to try deflecting attention away from CEST without confronting its own shortcomings, the more fuel it will add to the fire. The evidence is not in HMRC’s favour and there is plenty more to come.
Taxman continues to push mistruths
Otherwise, Harra responded in typical fashion, reiterating HMRC’s laboured rhetoric, including its tired – and incorrect – claim that CEST was developed to comply with employment law. Remember: this is the same tool which deliberately omits mutuality of obligation (MOO) on the unlawful assumption that MOO inherently applies to all contractor engagements.
Harra also told the PAC that CEST had been extensively tested using lawyers, yet, in February 2018, HMRC conceded that it had no detailed test data when asked to provide proof via a Freedom of Information (FOI) request.
Harra added that HMRC stands by the result issued by CEST, unless it feels that the questions have been answered incorrectly. This is a major caveat, which essentially gives HMRC free license to challenge any assessment delivered by CEST.
HMRC isn’t listening, but Parliament is
ContractorCalculator is grateful to PAC chair Meg Hillier for taking our arguments into account and posing them directly to HMRC. It’s just a shame that Hillier was unable to press Harra further, given the evidence that we provided.
HMRC’s claims are riddled with mistruths and inaccuracies, of which those less familiar with our campaign will be unaware. We would like to see how HMRC responds when confronted directly with its own tall tales, given that it continually refuses to address our evidence.
HMRC is not taking the public sector IR35 reforms seriously. Now, in addition to overtaxed contractors and damaged public sector projects, there is evidence to suggest that employment tribunals are set to be further clogged by tax claims.
But, while HMRC might not be listening, Parliament clearly is, and ContractorCalculator will do all that it can to leverage this as more evidence comes to light. Investigations are ongoing. Sooner or later, HMRC’s chickens will come home to roost.
To support the campaign against IR35, please subscribe to our mailing list, and help raise awareness by following the instructions set out on our IR35 campaign page. Please follow or connect with our CEO Dave Chaplin on LinkedIn. Dave regularly posts about the IR35 reforms and is an essential contact to have for keeping abreast of the latest news surrounding the legislation.