IPSE appears before House of Lords committee to give evidence on IR35

In 2020 the House of Lords Finance Bill Sub-Committee published a highly critical report on the IR35 private sector reforms which were due to come in. Now the same committee is consulting with industry again to understand how the most recent reforms have affected ‘engagers’ – your clients. On Monday, I was pleased to sit before this influential group of Peers to update them on IPSE’s latest research into the impact of IR35, as part of their inquiry into off-payroll working legislation.

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When it comes to IR35, the government simply won’t listen to what industry is saying. But it will be obliged to respond to the Lords’ findings from this inquiry once they publish their report; that makes this inquiry a valuable opportunity to challenge the government with yet more evidence that this legislation is not working – one that IPSE was all too happy to take.

At Monday’s evidence session, IPSE made clear that the 2021 IR35 reforms have been enormously disruptive for engagers and hiring agencies alike, making flexible freelance talent more difficult to find. This is reflected in the thousands of messages we have received from our members, as well IPSE’s research into how clients are coping since the reforms were introduced. We were pleased to see these sentiments were also echoed by other witnesses at the evidence session, including the Confederation of British Industry, the Federation of Small Businesses, and the Employment Lawyers Association.

We also pointed out that IR35 rules are just too complicated for many well-intentioned clients to understand and apply in practice, and flaws in HMRC’s CEST tool, which fails to account for mutuality of obligation, only makes things worse. In fact, our research indicates that some clients are manipulating the CEST tool to produce inside IR35 determinations to support a blanket policy of deeming all contractor engagements as being caught by the legislation.

You can watch the evidence session in full here.

Arguments around the difficulty of determining IR35 status are as old as the hills, and our understanding of employment status is constantly changing and evolving through court rulings. But one thing is clear – simply transferring the liability for determining status from one party to another only serves to compound the confusion.

IPSE will never stop campaigning against this deeply damaging legislation, taking any platform we can to speak out about the damage that recent reforms to IR35 legislation have had on contractors. With the inquiry almost at its end, we can now look forward to the publication of the Lords’ follow-up report in the coming months.

Visit our IR35 News page to keep up with the latest updates, and you can find more support and useful information with our IR35 guide.

Meet the author

Andy Chamberlain

Director of Policy and External Affairs

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