According to three well-known tax experts, the idea to transfer the control of IR35 from the HMRC to the clients is flawed and may create lots of issues in the future. To do this transfer, the engagers will have to proceed with disagreement processes for internal status starting from 2020.
At first, it sounds as if these processes are not mandatory as the taxman states that the clients “may” have to execute those processes. However, the expert trio dismissed the implication that the clients can become ready by the April of 2020.
More importantly, it is unjust for the contractors. According to Helen Christopher—who serves as a Director at Orange Genie—there is no independent body through which off-payroll workers can appeal for any issue. Additionally, even if the evidence given by the worker is assessed before deciding an outcome for an appeal, in the end, the clients hold control through their role as both the judge and jury.
Nigel Nordone—a former tax official—offered his own take on the matter. He stated that it should be absolutely necessary that the system for appeals can be easily accessed, understood, and operated identically for all of the private sector stakeholders. He criticised the idea which centres on engagers to create their own dispute process system for internal affairs and believes that it would create further unfairness, inconsistency, and confusion, factors which cannot be afforded in such a crucial reform.
Tim Stovold—the head of tax at a charted accountancy firm—said that with the use of such a system, contractors will be asked by their clients to oppose treatment as staff. However, since the taxman expects companies to have polished and refined HR processes, it seems as if HMRC will turn a blind eye to these cases.
Stovold alerted that the development of a disagreement process, which is compliant with all the legal scenarios, will emerge as a massive challenge for companies that operate without the assistance of in-house HR consultants.
Conversely, the HMRC disputes these claims. According to a spokesman from the taxman, the government believes that if the clients are required to develop such processes, then it would not burden them much. They expect that the medium and large businesses in the private sector and organisations from the public sector must have sophisticated HR policies and systems to deal with work-related issues in the first place.