Autumn budget announced – but what about private sector IR35? | Atlantic UmbrellaAtlantic Umbrella

Autumn budget announced – but what about private sector IR35?

by Alan Little

2 October 2018 Category HMRC
2 October 2018, Comments 0

In the wake of Chancellor Phillip Hammond’s announcement that the autumn budget will come earlier this year on the 29th October instead of last year’s 22nd November, a leading tax advisory for contracting professionals has gloomily speculated that ill-conceived IR35 reforms are still likely to hit the private sector, even though current economic circumstances make such a move foolhardy.

Qdos Contractor’s Kate Cox notes that this year’s budget arises amidst stalling Brexit negotiations and severe public sector problems.

Politic Mag has recently noted growing pressure on Mr Hammond from within his own party to loosen public spending purse-strings in order to appease mounting voter frustration over almost a decade of spending cuts to many public services. The Prime Minister, Theresa May, has yielded to this pressure with a pledge to increase the NHS budget appreciably.

Many NHS hospitals have endured huge pressure this year, with worrying numbers declaring a “black alert” after overcrowding reached critical proportions and threatened patient safety.

In January, The Guardian reported official NHS figures showing that record numbers of patients had suffered delays in their care, often by being sent to different A&E departments to the one originally planned, or by having their scheduled operations cancelled. A total of 68 A&E doctors jointly signed a letter to Mrs May complaining that patients were dying prematurely following extended delays in hospital corridors.

In the light of these pressures, Kate Cox asks whether the Government will take the “foolhardy” step of implementing IR35 reforms in the private sector or adopt a more cautious and fool-proof stance instead.

As yet, HMRC have not yet issued its “Summary of Responses” to the discussion document on extending off-payroll tax reforms from the public sector to the private sector. However, as Cox notes, it would hardly be uncustomary for HMRC to release the document much closer to the budget date if they were determined to drive though the legislative reforms, which will impact vastly more employers, contracting professionals and intermediaries than exist in the public sector.

While a more cautious approach would be welcome, Cox is sceptical that the Government will take it, and suspects that it will instead swallow HMRC’s short-sighted attitude toward the true impact of IR35 in the public sector, which portrays the reforms as a certain means of tipping more money into Government coffers.

Warning that chaos is almost certain to follow such reforms, Cox concludes: “The income apparently promised to the NHS in this year’s Budget is likely to be spent on mopping up the effects of further IR35 reform, rather than being spent on critical resources, the lack of which plunged the NHS into crisis earlier this year.”