Source · Select Committees · Public Accounts Committee
Recommendation 19
19
It is not yet clear to what extent the IR35 changes may have contributed to...
Conclusion
It is not yet clear to what extent the IR35 changes may have contributed to these issues by affecting hiring practices and decisions made by contractors in key parts of the workforce.38 HMRC believes that the reforms are unlikely to have had a material impact on the flexibility of the labour market but acknowledges that it does not yet have evidence on this, and its research has not examined whether there are particular issues in particular sectors.39 Stakeholders have reported that HMRC could do more to work with different sectors to understand the challenges they face, help develop more specific guidance and ensure that its CEST tool works equally well regardless of sector and role.40 HMRC told us of the ways it engages with stakeholders to monitor developments, particularly through its IR35 Forum. But there remain questions for how well HMRC can keep up with rapidly emerging and changing sectors, particularly in areas that have seen changes to more flexible and ad-hoc working practices in recent years.41 Assessing total costs and benefits of the reforms
Government Response
Not Addressed
HM Government
Not Addressed
4: PAC conclusion: We are not confident that HMRC works proactively to establish whether any sectors have been affected disproportionately by the reforms and why. 4: PAC 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. 4.1 The government agrees with the Committee’s recommendation. Target implementation date: December 2023 4.2 HMRC undertook an extensive programme of customer education and support during the implementation of the reforms and continues to engage with stakeholders, including through the Employment Status and Intermediaries Forum. 4.3 HMRC has also already provided additional support to address inherent challenges faced by specific sectors where these have been identified. For example, it has produced sector-specific factsheets for the transport and construction sectors and has published guidance on umbrella companies in response to customer insight gathered from a range of sources. HMRC agrees there is value in building on this foundation and is committed to continuing to support customers with compliance – including at sector-specific level. 4.4 In addition, HMRC will develop and implement a stakeholder engagement strategy. This will set out how it will proactively engage with its stakeholders, to develop its understanding of the specific challenges faced by particular sectors. This will build on existing customer insight to inform targeted education and communications with the aim of further supporting customer compliance.