Recommendation 4

We are not confident that HMRC works proactively to establish whether any sectors have been affected disproportionately by the reforms and why. Issues in UK supply chains have been widely reported in recent months, for example in fuel and groceries. It is unclear to what extent the IR35 changes may have contributed to these by affecting hiring practices or decisions by contractors in key parts of the workforce. Particular concerns around difficulties in implementing the rules have also been raised by contractors in the broadcasting and IT sectors, and these issues may be compounded in areas that have seen changes to more flexible and ad-hoc working practices in recent years. We do not have confidence that HMRC is identifying which sectors may be disproportionately affected, nor that it is working proactively with affected sectors to understand what issues they are facing and how these might be addressed. Recommendation: HMRC should proactively identify and work with sectors that have been particularly affected to understand the challenges, establish how to address them and make it easier to comply. HMRC should write to us with an update in six months with the outcome of this public engagement.