2
Recommendation
Second Report - Lessons from implementi…
Not Addressed
We are concerned that it is too difficult for workers to challenge incorrect status determinations. The absence of a clear definition of self-employment, and limited access to relevant personal information for each contractor, can make it challenging for hiring organisations to make status determinations confidently. Hiring organisations can face significant …
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We are concerned that it is too difficult for workers to challenge incorrect status determinations. The absence of a clear definition of self-employment, and limited access to relevant personal information for each contractor, can make it challenging for hiring organisations to make status determinations confidently. Hiring organisations can face significant financial consequences if they incorrectly assess someone as self-employed, and this risk may affect their determinations. Workers can challenge decisions with the hiring organisation, but they have no independent route to appeal. The hirer must respond formally to an appeal from a contractor within 45 days. However, if they do not change the status, the worker has no further recourse other than to seek a refund from HMRC by completing their self-assessment return on a self-employed basis. It is unclear how effectively these routes operate in practice and the extent to which they are used, because HMRC does not monitor this. Recommendation: HMRC should ensure there is a fast and independent process for contractors to resolve disputes over status determinations. As part of this, it should assess the extent to which workers are using existing appeals routes, and how well they are working.
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Government response AI summary
The response discusses the Office for Students (OfS) consulting the sector on its activity, improving communications with providers, and commissioning qualitative research. It does not address the recommendation about a fast and independent process for contractors to resolve disputes over status determinations.
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HM Treasury
1
Conclusion
Second Report - Lessons from implementi…
Not Addressed
On the basis of a report by the Comptroller and Auditor General, we took evidence from HM Revenue & Customs (HMRC) regarding the implementation of off-payroll working tax rules, known as IR35.1
Government response AI summary
The government response acknowledges the receipt of the report and provides basic contextual information.
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HM Treasury
20
Conclusion
Second Report - Lessons from implementi…
Not Addressed
HMRC states that the IR35 reforms increased tax revenues by increasing the numbers of workers deemed to be employed for tax purpose. It has estimated that there was a net increase in tax revenue of £250 million during the first year of the reform, and an additional 50,000 individuals put …
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HMRC states that the IR35 reforms increased tax revenues by increasing the numbers of workers deemed to be employed for tax purpose. It has estimated that there was a net increase in tax revenue of £250 million during the first year of the reform, and an additional 50,000 individuals put on payroll during the first two years.42 HMRC told us that the estimated increase in yield was £275 million in the second year.43 HMRC told us it is confident that it can attribute the increase to the reforms in the short term.44 However, it is difficult to disentangle the impacts of the reform from other factors that may have affected employment patterns. EU Exit, the COVID-19 pandemic and wider changes in government resourcing to reduce use of contractors mean HMRC cannot be certain to what extent the increase is due to the reforms.45
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Government response AI summary
The government response simply repeats the committee's conclusion, stating that HMRC believes the IR35 reforms increased tax revenues.
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HM Treasury