Evidence presented at the Digital, Culture, Media and Sport Committee today by BBC presenters should be a wake-up call to the Government about the dangers of rolling out the deeply flawed changes to IR35 to the private sector, IPSE (the Association of Independent Professionals and the Self Employed) has today said.

Since April 2017, the IR35 status of contractors in the public sector has been determined by the client and not the contractor. On the same day as the Spring Statement last week, the Government announced its consultation on extending the changes to the private sector would be released in the “coming months”.

Andrew Chamberlain, IPSE’s Deputy Director of Policy and Public Affairs commented: “What we saw today was further evidence of the chaos caused by the Government’s ill-judged policy to transfer the IR35 burden from the contractor to the public authority which hires them.”

“The criticisms of the Check Employment Status for Tax tool (CEST) made today are entirely accurate. The CEST tool cannot be relied upon to make correct determinations which is why many organisations feel forced to take a blanket approach – pushing all off-payroll engagements into IR35 unfairly. This has resulted in highly skilled, professional contractors fleeing the public sector, robbing it of vital specialist skills, damaging public services and leading to delays in major projects.”

“We are very concerned the changes may be wreaking havoc in the NHS. Extending the IR35 changes to the private sector will cause further chaos, and will damage the competitive advantage of the UK workforce – its flexibility – at a time when it is needed the most.”

Last year, IPSE released a Tax Manifesto ‘A Fairer, More Efficient Tax System’ calling for an independent review into the tax system which clarifies the status of the self-employed and protects workforce flexibility. “We’ve been trying to cram modern working practices into a rapidly aging tax system, and the cracks are starting to show,” Chamberlain said. 

“The UK tax system is no longer fit for purpose, it’s based on an outdated principle that all income tax payers are employers or employees, which they are not. There are now 4.8 million self-employed people in the UK, representing 14 percent of the workforce. This is not a peripheral group, this is a significant pillar of our economy. IPSE has been calling strongly for a comprehensive review for some time now. The review should be chaired by an independent expert, and should make recommendations aimed at making simplifications for taxpayers.”