An expert trio explains that the taxman failed to correctly evaluate the IR35 reform for the public
sector and was particularly unsuccessful in taking lessons in the last two years to smoothly transition
an improved reform in the private sector.
According to Qdos—a status firm—and Bauer & Cottrell—IR35 and IPSE advisory, because of the
disregard shown by HMRC for the IR35 changes in the public sector, it seems hard to see a rollout
without major flaws. Kate Cottrell stated that,
“It is acknowledged that HMRC and HMT have listened to some concerns raised by stakeholders,
prior to the roll-out of new IR35 rules for the private sector.”
She further explained that to date there was no fair analysis on the actual working and impact of the
public sector rules—this has been proved by a number of bodies.
The Bauer & Cottrell co-founder then went on to ask: “So how can it be right to continue to claim a
resounding success in the public sector when this new consultation aims to change the public sector
Qdos’ chief executive Seb Maley said that many contractors from the public sector were unfairly
added in the scope of IR35. Therefore, he believes that introducing IR35—without assessing its
impact in the public sector—is “short-sighted”.
The responses from both these status experts and IPSE were submitted to the consultation where it
was proposed that IR35 reforms of April 2017 were to be extended in the private sector.
The contractor body IPSE informed HMRC that there are still “unresolved” problems with the IR35
changes from April 2017. They recommended an independent body that can review the IR35 reform
in the public sector in detail. This implies that they are not too confident on the HMT’s review that
was released in May 2018.
IPSE further explained that this is a unique opportunity for the government to fully comprehend the
impact of the IR35 reforms in the public sector before it implements them in the private sector. They
also recommended the review to be assessed for a minimum of one complete tax cycle before the
reforms come into effect. This can help to identify those issues that regularly reappear with the tax
cycle by making use of solutions that can counter them before the private sector changes are