The recruitment sector has urged MPs to delay introducing the IR35 reforms. With contractors, agencies and end clients confused about the reforms, the Association of Recruitment Consultancies (ARC) has written a letter to MPs requesting them not rush to introduce the reforms as the legislation still needs to be scrutinised minutely.
The letter, written by ARC Chairman Adrian Marlowe, states that the ARC wants a delay in rolling out the reforms until all the issues have been fully considered. Marlowe believes that a delay until autumn will allow the concerned parties to sit together and resolve any IR35-related issues.
The issues that Marlowe is talking about have been raised by the stakeholders associated with the public sector in the run-up to the IR35 reforms rolling out on 6th April this year.
Public sector bodies will be responsible for determining whether IT contractors and other contractors working for them should be taxed like a salaried employee or an off-payroll employee. Previously, contractors decided their tax status, but with the reforms, this has changed. The ARC believes that this change in tax status determination will result in conflicts between contractors and public sector organisations.
Marlowe pointed out that when a recruitment agency is involved in the contractor hiring process, the agency will not know the kind of relationship that exists between the contractor and the public sector body. With the end client wanting to take the cheapest possible route, and the contractor looking to maximise their earnings, it will lead to a conflict between the two, and may work against the contractor.
Marlowe also said that the fact that the public sector body had to determine the contractor’s tax status prior to the contractor joining was against employment case law. It would result in legal implications for the public sector organisations, which is worrying as there is no right of appeal if an incorrect decision is taken by an organisation.