While the government has left out the Making Tax Digital scheme from the proposed Finance Bill 2017, NHS contractors have not been so lucky with the IR35 rules. The rules have been amended, and this could cause problems for contractors who have already received payments.
Bauer & Cottrell, an IR35 advisory firm, stated that retail businesses that serve the NHS will not be covered under the IR35 rules. These businesses include opticians and high street pharmacies that otherwise would have had to determine whether the contractors working for them fall under the off-payroll rules. However, with the amendments, this is no longer the case.
NHS Contractors working through PSCs affected
Furthermore, the changes in the IR35 reforms have categorically mentioned that NHS hospitals have to apply the rules to NHS contractors working through PSCs, and these rules have to be applied to the contractors retrospectively, effective 6th April 2017. This could create problems as some of the contractors may have already received payments.
Bauer & Cottrell Co-Founder Kate Cottrell stated that HMRC should not have waited for three whole weeks into the new IR35 rules to make these changes. She said that this could have serious consequences, even if they are unintended.
Cottrell mentioned that the contractors who are affected by the IR35 reforms are already in a state of confusion, and this new amendment will just add to the existing chaos. She believes that retail pharmacies and opticians working for the NHS will now have the liberty to select the best contractors, and this is unfair.
The Association of Chartered Certified Accountants (ACCA) also stated that the new IR35 rules exert pressure on the public sector, as the government will require more resources to ensure that the changes are implemented correctly, making a veiled reference to the NHS.
ACCA said that just like Making Tax Digital, the IR35 reforms should have been shelved and postponed until the election is over. ACCA is concerned that HMRC did not review the IR35 reforms minutely before implementing them.