Well, the results are in, and the votes have been counted in favour of Liz Truss, but will she be good for contractors?
Not so many votes – the win was by a lower margin than expected, with fewer votes than previous leaders of the Conservative Party. Yet that does not matter now. Liz Truss made it in the race to become Prime Minister, but will she be good for contractors?
This is a question on the lips of the contracting world. No doubt a collective sigh of relief has also been breathed in, that Rishi Sunak was not successful. He is very much seen as the man who implemented IR35 reforms despite their potential flaws.
Liz Truss in contrast may show some potential in being interested in contractors and their work. She may even go so far as to consider some reforms of her own.
This is mainly based on a talk she gave at an event co-organised by IPSE recently, alongside her interview in The Sun a couple of weeks ago. Yet others are sceptical. What can we glean from this matter?
Well first of all Liz Truss is a qualified Management Accountant so has some knowledge of financial matters. She has said at least that she wants to ‘get things done’ and she has previously said she does not think IR35 is good for contractors. These are good steps, yet in a recent poll of 470 contractors 94% of limited company workers did not believe that she would actually probe off-payroll working at all.
Is this apathy towards those in power or do people not believe in her specifically?
As time passes, the people of the UK will be expecting her to make promises and deliver on them.
This will be exactly the same for contractors. They will want Liz Truss to put her money where her mouth is. The previous government very much isolated contractors and hurt them again and again with policies.
They are looking for change. There will be all eyes on Kwasi Kwarteng as Chancellor to see what might come into their pockets. There is a series of negative issues at the moment what with the rising prices of commodities such as energy and food.
There will be all eyes on what the new government will be doing there too. Some say IR35 cannot be a priority at this time. It will be interesting to see what Liz Truss does consider her priorities in office and who she wants to appeal to.
Things have not been easy since the Conservatives got into power for groups like contractors. Whether this is going to change or not remains to be seen. Perhaps the best we can expect is that when the current crises have eased, that she changes focus.
Of course, a government can choose to achieve a great many things at once. However, there is a tendency to focus in on the big things to the exclusion of all others. We can only imagine what will happen in this case.
It is going to be another wait and see situation. Let’s hope something good can shine through in time.
Will you pass an HMRC IR35 enquiry?
Take our 5 minute online IR35 risk assessment to find out
HMRC’s soft landing period has ended and IR35 enquiries will soon begin in the private sector. Make sure you identify any risk areas and ensure you’re managing it correctly.
The Government Response to the Public Accounts Committee Review is Out
So here is one we have been waiting for, the Government have a response to the Public Accounts Committee review (PAC).
Just because it is here, does not mean you are going to like it though. This second report from PAC published in May, had some interesting things to say about IR35. One that was particularly notable relates to the businesses now making IR35 determinations.
They state that these businesses do not always have enough data and tools at their disposal to make this determination properly. This is an important point, as it is only since April 2021 that they have been making determinations at all. Also, many businesses are already getting into hot water with HMRC due to the status of some of their workers.
Changes to IR35 are in place to stop unscrupulous businesses from employing hidden workers. They are ones that should be employees. This means the individuals and businesses paying certain rates of tax and National Insurance.
By hiding employees and placing them outside IR35, they could be leading themselves down a path of investigation by HMRC. This is an undesirable outcome that no business wants to have. These new rules came into force for both medium and large private businesses.
To say they do not necessarily have the information to make determinations is quite damning. It suggests that these businesses could be unwittingly operating outside of the rules. Yet this is through no fault of their own. It would be worth taking professional advice, but some businesses do not do this.
The Government’s response covers some of the issues arising from the committee. They have for the meantime ruled out alignment with tax and National Insurance for contractors who are found to be in IR35.
In short, they will not get the same rights as their colleagues who have a permanent contract. They will pay the same tax and National Insurance, however.
Contractors find more and more that determinations are made putting them inside IR35.
Some of the time, they feel these determinations are wrong and this is to the financial detriment of them as the contractor. Well now this also remains to their detriment – whatever they do, they cannot seem to win with things.
The Government simply say it is not the right time to implement alignment. Some may disagree.
So that seems to call and end to this discussion for now. Yet, if the recent interviews with Liz Truss are to be believed, change could still come. She noted that the changes to IR35 might be unfair to contractors.
Her opinion is that IR35 tries to treat small contractors the same way as big businesses. Now she is the new Prime Minister perhaps change is not too far away. Even a new review would be a big step forward for contractors. While change is not on the cards just yet, perhaps it is, somewhere in the future.
Whatever comes, hopefully it will only be a benefit to contractors and truly put their position in a new light.
