‘Hypocritical’ HMRC has not engaged any contractors outside IR35 in past year, says IR35 specialist
IR35 specialist, Seb Maley, the CEO of Qdos, an insurer for the contractor industry, has reacted to the news that HMRC has not engaged any contractors outside the scope of the IR35 legislation in the past year – information that was revealed in the tax office’s Annual Report and Annual Accounts last week.
The accounts show that across HMRC, Revenue and Customs Digital Technology Services (RCDTS) and Valuation Office Agency (VOA) departments, 1096 temporary off-payroll workers were engaged during the year ended 31st March 2023, earning £245 a day or more, according to Qdos.
However, none of these workers was engaged outside of IR35, with the vast majority engaged via an umbrella company, Qdos reported.
HMRC’s hiring practices are pushing contractors into the unregulated umbrella sector. This is despite HMRC’s tax avoidance education campaign, which states on its site the following warning:
“If you’re a contractor, you may be employed through an ‘umbrella company’. If you’re not sure, it’s best to check as some umbrella companies try to break the tax rules.
“You may be at risk. But if you understand how umbrella companies work, you can take steps to avoid these risks.
“Read our guide to what it’s like to work through an umbrella company and how you’ll be paid.”
I don’t know what’s worse, HMRC’s attitude or the fact that forcing genuine contractors to work PAYE is a much more expensive way to engage flexible workers.
So along with impacting contractors, HMRC is wasting taxpayers’ money.Seb Maley, CEO qdos
“Where do you start? The less said about how HMRC has handled the off-payroll working rules the better,” says Seb Maley, Qdos CEO.
“On one hand, the tax office tells businesses that this reform will have little impact. Then when it comes to it, HMRC has banned contractors. It’s hypocritical – a case of ‘do as I say not as I do’.”
Maley says, “It’s no secret that many businesses have needlessly stopped engaging contractors because of the off-payroll working rules.”
But instead of leading by example and showing others that these rules are perfectly manageable, Maley believes that HMRC is “insisting that all contractors work on the payroll.”
“I don’t know what’s worse, HMRC’s attitude or the fact that forcing genuine contractors to work PAYE is a much more expensive way to engage flexible workers. So along with impacting contractors, HMRC is wasting taxpayers’ money,” says Maley.