HMRC’s IR35 report has come too late, says APSCo

With the recent IR35 changes, the ASPCo say that the HMRC and IFF research looking into the impact of off-payroll working reforms on employment companies, came too late.

The Association of Professional Staffing Companies (APSCo) also highlighted employee concerns about the reliability of the CEST tool.

Tania Bowers, Legal Counsel for APSCo, commented, “The research revealed a number of insights that were to be expected, with some recruitment firms already noting a drop in contractor numbers and client demand for PSC contractors. It is reassuring to see, though, that most staffing companies have been preparing ahead of the deadline.

“It is, however, disappointing that this research has come to light so late in the day, [with the new deadline only two weeks away], leaving little time for action from HMRC. In particular, the point raised by those surveyed that greater education of clients and contractors is vital is a message that APSCo has vocalised in the past, but despite some efforts by HMRC, they struggle to reach their audience and this is a significant problem in regard to “disguised remuneration” as well as the off payroll rules themselves. While it’s nice to see that this sentiment is echoed by those involved in the research, with preparations for off-payroll now finalised or in the process of being completed, it is too late to make any meaningful changes.”

Bowers added, “The potential high liabilities and costs which a recruiter may incur following an outside determination made by the client using CEST, which HMRC later decides is incorrect (which it can do) means it is unacceptable that there remain so many limitations and concerns around CEST as highlighted in the research. The investment in external tools and advice that we’ve seen over the preparation period was partly motivated by some agencies having doubts about the usefulness of the CEST tool for assessing the employment status of contractors on their books. These doubts were also shared by agencies that only used the CEST tool. Therefore, despite enhancements made to the CEST tool in 2019, some agencies continue to hold the view that there are issues with the scope, clarity, and applicability of the tool.

“Despite this issue being raised ahead of the original deadline, the reliability of the CEST is clearly still being questioned as the research highlights. However, again little can be done at this stage of the roll out to rectify this.

“The fact that just 34 staffing companies were surveyed does also bring into question the reliability of this research, as it is unlikely to provide a comprehensive picture of the entire recruitment market.”

To find out more about contracting please contact Jaime on 01442 795 100 or email jaime.thorpe@dolanaccountancy.com.