Source · Select Committees · Public Accounts Committee
Recommendation 16
16
Stakeholders have for some time reported that risk-averseness of hiring organisations could result in a...
Conclusion
Stakeholders have for some time reported that risk-averseness of hiring organisations could result in a decision to stop engaging freelance contractors.30 More recently, surveys conducted by organisations that represent or provide tax advice to contractors have found substantial numbers of contractors reporting that their last clients either completely ceased using PSCs or made a blanket determination that all off-payroll workers should be employed for tax purposes.31 HMRCs own research into the experience of public bodies has also found that significant minorities of hiring organisations had experienced difficulties filling vacancies, or had seen contractors increasing their fee rates.32
Government Response
Not Addressed
HM Government
Not Addressed
3. PAC conclusion: HMRC is not doing enough to understand the impact of the reforms on workers and labour markets. 3: PAC recommendation: HMRC should conduct and publish specific research into the impacts of the IR35 reforms on contractors and labour markets, to check it is being applied as intended and not adversely affecting employment opportunities. 3.1 The government agrees with the Committee’s recommendation. Target implementation date: December 2023 3.2 Although the government agrees with the Committee’s recommendation, it disagrees with the Committee’s conclusion. 3.3 The government has already published research on the short and long-term impacts of the public sector reform and is committed to publishing research on the impacts of the reform in the private and voluntary sectors later this year. 3.4 A central part of the government’s research into the impacts of the off-payroll reforms is with client organisations, as they have the best understanding of the overall picture of how they are engaging off-payroll workers. This research gathers data on changes to the way off- payroll workers are engaged, and changes to their rates of pay and to the ease of recruitment. 3.5 The government is also already supplementing this with research with other parts of the supply chain: research with agencies was published in March 2021, and research with off- payroll workers will be published once complete. The research with off-payroll workers will primarily focus on tax information and advice but also gathers insight into the impacts of the off-payroll reforms. 3.6 In addition to research, HMRC is conducting internal analysis to identify off-payroll workers who may have been affected by the reforms, and what changes may have occurred in the labour market following the reforms. This will be published once complete.