Kingsbridge – Written evidence (OPR0029)

 

Executive Summary:

We sent a survey to our PSC contractor customer base at the end of September this year, to find out how the IR35 reforms have been for contractors and how they had been assessed. This received 1675 responses, and some relevant responses have been included in this submission.

The off-payroll reform in April led to an increase in contractors cancelling their commercial insurance policies – primarily due to closing their company down, following the impact of IR35 changes.

Confidence in the government’s own Status Tool (CEST) remains low. This is due to criticism of the functionality and indeterminate outcomes, combined with high profile news reports of government departments (that relied on CEST) facing tax bills, and in some cases penalties too.

Kingsbridge’s submission features comments from Andy Vessey, Head of Tax at Kingsbridge. Andy has been deeply involved with IR35 since its inception in the year 2000 and has successfully defended around 600 contractors in IR35 enquiries.

1. Has the recent extension of the off-payroll working rules to the private sector made it more difficult for engagers to hire people with the right skills and expertise? To what extent has its introduction contributed to job vacancies?

The reforms in April saw an increase in contractors cancelling their insurance, with the most popular reason for cancellation being ‘IR35 – company closure’.

2. For those engagers (and their advisers) who use the CEST (Check Employment for Tax Status) tool to assess employment status, how effective do you consider it to be? Do you have confidence in its results? If not, what further improvements need to be made to it?

Andy Vessey, Head of Tax at Kingsbridge comments:

Contractor Survey results:

3. What changes have engagers had to make to apply the off-payroll rules to contractors, in terms of systems, personnel and training? By reference to your own experience, to what extent (if any) do you consider that compliance costs have increased because of the changes?

N/A

4. How well has HMRC supported engagers, contractors, and their advisers with the implementation of the new rules and is any further or different type of assistance needed?

Andy Vessey, Head of Tax at Kingsbridge comments:

5. To what extent has the introduction of the new rules generated disputes between engagers and contractors concerning the status of contractors vis à vis the rules and how successfully or otherwise have these been resolved?

Contractor survey stats:

Nicola Hayman, Legal Manager at Kingsbridge comments:

 

6. What behavioural effects have resulted from the introduction of the new rules in the private sector in terms of the arrangements adopted in hiring contractors?

Andy Vessey, Head of Tax at Kingsbridge comments:

Contractor Survey results:

7. The Government is proposing a new employment body with powers to enforce employment rights, including for those engaged by agencies and umbrella companies. How effective do you think such a body will be in ensuring workers, particularly the lower paid, are treated fairly?

Kingsbridge is always in favour of further compliance in the sector.

8. How successful will the draft Finance Bill proposals for earlier publication of information about promoters and avoidance schemes be in protecting individuals from being drawn into such schemes?

Andy Vessey, Head of Tax at Kingsbridge comments:

“The power for HMRC to present a winding up petition against companies involved in the promotion of tax avoidance where it is against the public interest should deter all but the most determined minority. The naming and shaming of not only promoters of tax avoidance but also those associated with promoters through control and influence is also welcomed.”

15 November 2021