With the recent news that a contractor took HMRC to court over issues relating to IR35 changing their employment status, it’s become clear that full implementation of IR35 is a murky and complicated issue. The legislation, instituted in 2016 for the public sector only, sets out that any company that is in effect just one person (e.g. contractors running a business with themselves as the only employee) should be treated as an individual and has recently closed a major consultation. The consultation aimed to discuss how best to achieve the wide-reaching remit of IR35 and extend its provisions to the private sector as well. The result was much industry objection to the plan, with many noting the issues with its implementation in the public sector and raising concerns about how those issues might be exacerbated in the complicated world of the private sector.
With such far-reaching changes, moving IR35 into the private sector as well could cause even more havoc as companies have to change many employee’s tax and employment status, with all the associated challenges that would come with it. If the government ploughs ahead with the extension, as it’s believed they will, employers across the board could be in for an interesting time!