With the potential of the public sector IR35 rules being extended to the private sector, let’s look at the alternatives ARC has proposed.
First we have suggested that the test should be shifted away from employment status to a more objective and realistic ‘is there a business’ test. As an alternative we have also proposed that the process as to whether IR35 applies should be reversed such that the tax is deemed to apply unless the contractor establishes otherwise. Finally in the absence of either of these proposals being taken up, there should be a ‘CIS’ style on account deduction from payment to the contractor.
All of the proposals would result in the tax and IR35 determination responsibility remaining with the contractor, not being pushed onto the agency or hirer. See our full response to government here.
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