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What Now for Contractors After Boris Johnson Resignation?

It has been a busy time in the Government this summer with the recent changes: firstly, the resignation of Boris Johnson, the fight for a new leader and as with all things, we need to wonder how this might affect contractors. 

After all, the Prime Minister who agreed changes to IR35 is gone.This all came after an unprecedented and record-breaking set of resignations, and huge potential change. Yet what do contractors think about the hopefuls that are trying to take his place?

Well, it sounds like they are specifically rallying against them rather than rallying for anyone. Is there no approach that contractors think will work in their favour?

IPSE is positive about this change. Their view is that Boris Johnson and his government brought along the IR35 changes and the resulting chaos. Therefore, a change of that government could be a good thing.

They are hoping that it could spell some changes for the good of contractors in the long run. As such they have written to the new Chancellor to open-up a dialogue about issues surrounding contractors and the self-employed. With the Conservative leadership contest ongoing, it is hard to fathom what the potential new recruits think about contractors.

Yet while this is currently unknown territory it could lead to unexpected change. Of course, whether this will be good or bad is very much yet to be seen.

Rishi Sunak Quit as Chancellor

Some contractor groups seemed particularly glad to see Rishi Sunak bowing out of his post. He is perceived as the main one driving IR35 changes. It is therefore unsurprising that those people were equally unhappy with the news that followed.

That he was one of the contenders for the top spot. Some suggest that whoever takes the Prime Minister vacancy, it cannot spell good news for contractors. Others say things have been rapidly going downhill, from additional taxes to forced use of umbrella companies.

Looked at this way, contractors and freelancers do seem to be somewhat thwarted at every turn. Blame for this is perceived to come from various corners.

Over the Summer, the leadership contest will take centre stage with the two candidates battling it out. Yet, while this contest is being fought, Boris seems determined to stick around in the background. A caretaker government is never a great thing, especially while there is bad blood.

With the summer recess coming fast upon us perhaps the changes to be seen at this time will be minimal. Some will favour one candidate over the other, but the potential benefits for contractors is very much unknown. When the new PM starts and puts down their roots that the truth will come out.

It will be interesting to see then what the new PM does and in what direction their Chancellor goes. Whether it will be Nadhim Zahawi by that time, who is to say? We shall have to wait and see.

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Alan Parry Faces HMRC Bill of Over £355,000

Back in the news are contractors, or perhaps we should say ‘contractors’ with issues over their IR35 bills.

This time it is Alan Parry who worked with Sky Sports as a commentator over many years. Set-up as Alan Parry Productions Ltd, his defence will have made the decision to appeal to due to the huge sum HMRC say he owes. This is over £222,000 in tax and over £133,000 in National Insurance Contributions.

These totals are so high to just pay for any but the most wealthy, no matter how unlikely the appeal. In this case, the first round was won by HMRC, although Parry will have the chance to appeal. But will appealing be a good move?

The facts of this case are quite eye-opening in comparison to others of recent times. In fact, the judge found that there were 12 different reasons why the IR35 determinations were wrong in this case.

One or two is one thing, but twelve are really something else. The main one was that over a 5-year period, Parry worked well over 95% of the time only for BSkyB. Most contractors working outside IR35 tend to take three-month contracts at a time.

This was something quite different with much longer contracts. Other issues were a factor too, such as BSkyB not being able to terminate the contract whenever they liked.

Also, they retained all intellectual property and Parry failed to substitute the whole time he was there. These were telling signs.

The Judge taking the view that Mutuality of Obligation (MOO) existed between Parry and BSkyB

Alan Parry eventually accepted a contract in 2019, for which the terms were pretty similar to his previous work. This suggests that both he and BSkyB probably knew what they were doing before was not quite right. Still, he will no doubt intend to appeal against the ruling as soon as possible.

The alternative is a tax bill that at the age of 74 with reduced working hours, he may not feel able to afford. It seems that in this case, there was plenty of unwise advice going around. Still, some sympathy needs to be felt for Parry. He has been waiting for a ruling in this case since 2016.

He has had it hanging over him all that time, not knowing the outcome. In fairness this did not end the way he was doubtlessly hoping for, but it is hardly surprising to outsider eyes.

As more and more cases come to the forefront, it is likely more cases will be won by HMRC. A tide of poor judgements with the intention to reduce taxes and National Insurance Contributions, has come to this point. Also, HMRC staff are no doubt combing through all available information on potential cases in great detail.

They aim to win and will intend to put forward strong cases. In this case, the judge found Alan Parry to have a very close relationship with BSkyB. If those who continue to wait have similar close relationships with their organisations, they might want to take note.

Is there nowhere to hide in HMRC’s investigations of those who say they are working outside IR35?