Contractors should take note of the media speculation over shock new IR35 rules being considered by the Government. Even though HMRC told the Recruiter that it was not prepared to comment as the measures were not announced through official channels, there is almost certainly some truth behind them and it is not too late to take action.
The draconian new ‘one month rule’ and clients becoming responsible for IR35 compliance that the Guardian and MailOnline claim are to be announced by the Chancellor George Osborne during his Autumn Statement 2015 could well be a ‘trial balloon’.
A trial balloon, according to politically savvy Crunch Ambassador and former Leader of Brighton & Hove City Council Jason Kitcat, is a commonplace technique used by Government to test the reaction to potentially controversial new policies.
Speaking exclusively to ContractorCalculator, Kitcat told us that: “Government are in the frantic build up to the spending review being announced, so it is quite likely that various policies are being trialled and public relations techniques are being applied to help shape responses.”
Kitcat goes on to say: “Release of this suggested ‘one month rule’ could be softening up opinion before releasing a far less strict measure in the final announcement. So, for example, the intention could be to consider contractors who have spent three months with a client to be ‘employees’, rather than just the one month as the media reports suggest.
“Alternatively, the intention could be to gauge response to a genuine plan and shape policy accordingly. The Treasury is believed to be nowhere near finished with the spending review and Autumn Statement, so it could even be an attempt to resolve an internal battle within the Treasury and HMRC.”
Kitcat’s message to contractors is that there is still time to take action before the Autumn Statement and, depending what is announced and how the Government plans to implement it, any proposed changes are by no means a done deal.
“Although we do not know for certain what is planned, and will not know until 25 November, we will be making representations in the meantime to head off any negative plans in the Autumn Statement.”
Several other contracting sector organisations have told ContractorCalculator that they will also be making strenuous efforts to find out the real plan behind the leaks, and to do everything possible between now and the Autumn Statement to water down the proposals, if they are real.
Contractors can also play their part. Kitcat believes that there are an increasing number of Conservative backbenchers who are starting to understand the benefits that the UK’s flexible knowledge-based workforce deliver to UK plc.
“We’ll see if MPs truly understand the damage that these proposals could cause if they speak up against the measures,” he adds.
Contractors should contact their MPs and explain to them that not only will the livelihoods of a great many of their constituents be destroyed on their watch, but the damage to the UK economy will be significant enough to derail its recovery.
It may be speculation and headline grabbing by the Guardian and MailOnline, but the proposed measures to force 100,000 limited company contractors into Pay As You Earn (PAYE) almost certainly incorporate a grain of truth. Contractors should take action now, before it is too late.