Lords suspect IR35 manipulation

Members of the House of Lords are not buying into IR35 confusion as ‘suddenly they did not understand it when more tax is being collected’

Changes to the off-payroll working rules, which bring most contractors working through a personal service company (PSC) into income tax and NICs obligations, has sparked reaction in a demonstration outside of parliament and lobbying from MPs calling to #StoptheOffPayroll.

Speaking at the Lords finance bill subcommittee on Monday 16 March 2020, Lord Desai said: ‘So the businesses understood what it was, what they were doing, and as someone poses a correction to their behaviour, suddenly everybody does not understand the law.

‘They understood the law before perfectly well.

‘I as an ordinary citizen read about it and get very angry that it is unfair to people who do a regular job.’

HMRC has estimated that IR35 reform will generate an additional £1.2bn in tax for 2020-21.

Lord Desai added: ‘Either people knew what they were doing, and they are manipulating it, or they did not understand it.

‘Suddenly they did not understand it when more tax is being collected.’

Some argue that businesses are not prepared for IR35 implementation which is scheduled to come into effect from 6 April, and that parliament needs to rethink, not reschedule.

Oil and Gas UK (OGUK) is a trade association that represents the UK’s offshore oil and gas industry, their representative and supply chain director, Matthew Abrahams, said: ‘If there was to be a meaningful consideration of the actual facts then obviously for our members that would be appreciated.

‘But if we were to have a delay just to come back to where we are now – it would not be helpful.’

Half of businesses were not confident in making status determinations, 49% have not taken any steps so far whatsoever to prepare for these changes, and 41% do not know how many individuals they are currently engaging through an intermediary, according to an HMRC webinar straw poll collected last month.

These statistics were collected on 19 February 2020.

The finance bill sub-committee meeting

300+ protest IR35 outside parliament

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