I always enjoy the REC’s (Recruitment Employment Confederation’s) webinars and this week was no exception on the IR35 legislation that has been run out to the Public sector and the results, now pending the Private Sector.
Speakers on the webinar were:
Karen O’Reilly – Stakeholder Engagement Manager for the REC.
Philip Campbell – Senior Policy Adviser for the REC.
Andy Chamberlain – Deputy Director of Policy for IPSE.
Mark Beal-Preston – MD for First Freelance.
The REC is representing industry to the highest levels of Government to give us the heads-up on policy developments and our focus at present is on
Immigration and Skills, Industry Regulations, Inclusion – helping people to get back into work and progression, Procurement, Taxation and The Future of Jobs.
A hot topic discussed was extending public sector reform to the private sector with IR35!
– Transfer the responsibility for determining whether a worker would have been regarded as an employee if engaged directly, to the engager, ie. end-client
– The client or agency paying the PSC, would be responsible for deducting the income tax and NICs, and paying them to HMRC
– The liability for paying employer NICs would transfer from the PSC to the end client or fee- payer/agency.
It was interesting to hear that there was an overwhelming concern from agencies on being liable as a PSC and that everybody felt the end client should be responsible for paying the tax and NI of any due to HMRC.
The likely timeline now for the change into the private sector is 6th April 2019, but could be 2020. The latter was felt was the best as this would give the opportunity to iron-out any complications and clarify guidance on the HMRC compliance test as many of their test cases are being lost in court! Also, with the unknown effects of Brexit on our industry, it would be better to wait and see those results first before any more impact?
Current results in the public sector are that 3 out of 10 contractors ended their contract before the new rules came into effect and that over a 1/3 moved to an Umbrella Company, 23% showed no change, 17% found new contracts where IR35 did not apply and 4% stopped working altogether.
Advice for the contractors was to make sure their Umbrella companies were compliant!
Overall feeling from the poll is that recruiter’s costs would increase due to the needs for greater resources to support the proposed legislation due to increased Accountancy fees, IT systems to support it, staff costs to manage it, training costs and system CRM costs.
I suspect that too much risk put on the agencies, will result in less contractors in the market? Less contractors in an ever diminishing labour market, especially with Brexit, could equal a difficult time for business? Keep in touch with Avatar for further developments.