Lessons from implementing IR35 reforms

Public Accounts Committee Closed Inquiry
Opened: 12 Jan 2022 Closed: 2 Sep 2022 Parliament page
Lessons from implementing IR35 reforms “Off-payroll working” - known as ‘IR35’ - tax rules can apply if a worker or “contractor” provides their services to the client through their own limited company or another type of intermediary. The rules aim to make sure that workers who would be classed as … Read more
12 Recommendations
10 Conclusions
1 Report
1 Oral session
1 Letter
1 Event
Activity timeline 5 events
2 Sep
2022
Report published
25 May
2022
Report published
22 Feb
2022
Correspondence
21 Feb
2022
Oral evidence
21 Feb
2022
Formal meeting (oral evidence session) · The Wilson Room, Portcullis House
Oral evidence sessions 1 session
21 Feb 2022
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Lessons from implementing IR35 reforms
Jim Harra · HMRC Nicole Newbury · HMRC Pete Downing · HM Revenue and Customs
Title HC No. Published Items Response
Second Report - Lessons from implementing IR35 reforms HC 60 25 May 2022 22 Responded
Recommendations & Conclusions
5 results
Clear
5 Recommendation Accepted in Part
Second Report - Lessons from imple…
HMRC has not made a robust assessment of the additional costs of implementing the reforms.
HMRC has not made a robust assessment of the additional costs of implementing the reforms. HMRC states that the IR35 reforms increased tax revenues by increasing the number of people employed for tax purposes, but it is unclear to what … Read more
Government Response
The government agrees to produce and present to Parliament a cost-benefit analysis of the reforms, but states that, based on current data, it does not believe it will be possible to publish a full cost-benefit analysis taking account of all parties in the supply chain.
HM Treasury
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11 Recommendation Accepted in Part
Second Report - Lessons from imple…
Evidence received from stakeholders indicated that many of the challenges with IR35 stem from underlying...
Evidence received from stakeholders indicated that many of the challenges with IR35 stem from underlying issues in tax administration.19 HMRC told us that it would be simpler and more straightforward to administer the tax system if tax liabilities of employed … Read more
Government Response
HMRC has already implemented a process to reduce the circumstances where it collects tax twice and has set up a working group to consider a legislative solution to account for taxes already paid. HMRC will notify the Committee of a target implementation date as soon as this work has concluded.
HM Treasury
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14 Recommendation Accepted in Part
Second Report - Lessons from imple…
Furthermore, the current legal framework does not let HMRC offset liabilities for non- compliance against...
Furthermore, the current legal framework does not let HMRC offset liabilities for non- compliance against any taxes already paid by workers and their PSCs.24 In law, HMRC must collect the full taxes that should originally have been paid from the … Read more
Government Response
HMRC has already implemented a process to reduce the circumstances where it collects tax twice and has set up a working group to consider a legislative solution to account for taxes already paid. HMRC will notify the Committee of a target implementation date as soon as this work has concluded.
HM Treasury
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21 Recommendation Accepted in Part
Second Report - Lessons from imple…
There is also not a complete picture of the costs of the reforms against which...
There is also not a complete picture of the costs of the reforms against which the benefits could be compared. HMRC has estimated the cost to hiring organisations, but its modelling is based on a theoretical minimum needed to comply, … Read more
Government Response
HMRC will share with the Committee and publish analysis setting out the estimated actual amount spent to comply with the reform by client organisations, alongside estimated additional receipts generated from the reform, but does not believe it will be possible to publish a full cost-benefit analysis taking account of all parties in the supply chain.
HM Treasury
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22 Recommendation Accepted in Part
Second Report - Lessons from imple…
HMRC does not have estimates for the costs incurred by organisations other than hiring bodies.
HMRC does not have estimates for the costs incurred by organisations other than hiring bodies. The government introduced the reforms because it considered it too costly for HMRC to oversee an effective compliance regime with each individual PSC.49 It is … Read more
Government Response
The government agrees to produce and present to Parliament a cost-benefit analysis of the reforms, but states that, based on current data, it does not believe it will be possible to publish a full cost-benefit analysis taking account of all parties in the supply chain.
HM Treasury
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Government Response AI assessment · 20 of 12 classified
Accepted 6
Accepted in Part 5
Acknowledged 6
Not Addressed 3
Total 12 recs + 10 conclusions
Correspondence 1 letter
22 Feb 2022 Correspondence from Jim Harra, Chief Executive and First Permanent Secretary, re Off-payroll research report publication, dated 8 February 2022
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