IPSE responds to House of Lords Follow up Inquiry into IR35

IPSE has welcomed the House of Lords Economic Affairs Finance Bill Sub-Committee’s follow up report on IR35, which was published today.

The House of Lords Draft Finance Bill Sub Committee has published the main conclusions and recommendations from its follow up inquiry into the 2021 off-payroll working reforms. The committee’s initial inquiry was highly critical of IR35. This latest inquiry notes the sharp increase in the use of umbrella companies since the changes to IR35 in the private sector in April 2021 as well as the flaws in the CEST tool, and the lack of consistency across tax and employment rights.

Andy Chamberlain, Director of Policy at IPSE (the Association of Independent Professionals and the Self-Employed) said: “Their Lordships have once again cut through the complex web surrounding IR35 and have identified some key areas that must be addressed as a matter of urgency by the government. In particular, the committee is right to highlight the inherent flaws in HMRC’s CEST tool, which undermines the veracity of thousands of status determinations.

“Similarly, we fully support their recommendations around the need to clarify employment status rules and to ensure that individuals are treated fairly across both tax and employment rights. If action isn’t taken by the government to solve this issue, then self-employed workers will continue to be in a ‘worst-of-both-worlds’ scenario where they are taxed as employees yet denied the full suite of benefits associated with employment.”