Second Report - Lessons from implementing IR35 reforms

Select Committee
Public Accounts Committee HC 60 25 May 2022
Report Status Government responded
Conclusions & Recommendations 22 items (13 recs)
Source View on Parliament website
Government Response (AI assessment · 22 of 22 classified)
Accepted 7
Accepted in Part 6
Acknowledged 6
Not Addressed 3
Government response
Treasury minutes: Government response to the Committee of Public Accounts on the Second report from Session 2022-23 · published 2 Sep 2022
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Recommendations & Conclusions

7 results
3 Recommendation Accepted
HMRC is not doing enough to understand the impact of the reforms on workers and...
Recommendation
HMRC is not doing enough to understand the impact of the reforms on workers and labour markets. The complexity of the rules, and the perceived risk to hiring organisations of failing to comply with them, may lead to changes in … Read more
Government Response Summary
The government will conduct and publish specific research into the impacts of the IR35 reforms on contractors and labour markets, with a target implementation date of December 2023. They disagree with the committee's conclusion but agree with the recommendation.
HM Treasury
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4 Recommendation Accepted
We are not confident that HMRC works proactively to establish whether any sectors have been...
Recommendation
We are not confident that HMRC works proactively to establish whether any sectors have been affected disproportionately by the reforms and why. Issues in UK supply chains have been widely reported in recent months, for example in fuel and groceries. … Read more
Government Response Summary
HMRC agrees to proactively identify and work with sectors that have been particularly affected by the reforms, and will develop and implement a stakeholder engagement strategy to develop its understanding of the specific challenges faced by particular sectors, with an update due in six months.
HM Treasury
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8 Conclusion Accepted
The absence of a clear definition of self-employment, and limited access to relevant personal information...
Conclusion
The absence of a clear definition of self-employment, and limited access to relevant personal information for each contractor, can make it challenging for hiring organisations to make status determinations confidently.13 Hiring organisations can face significant financial consequences if they incorrectly … Read more
Government Response Summary
The government agrees with the observation, stating HMRC has already implemented processes to reduce instances of double taxation and is actively seeking required information from client organizations. It has also established a working group to consider legislative solutions, and will notify the committee of a target implementation date once this work concludes.
HM Treasury
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10 Conclusion Accepted
We asked HMRC to what extent it considered that hiring organisations were treating workers unfairly,...
Conclusion
We asked HMRC to what extent it considered that hiring organisations were treating workers unfairly, for example by using ‘blanket assessments’ instead of assessing workers on a case-by-case basis. HMRC told us it had seen limited evidence of blanket assessments, … Read more
Government Response Summary
HMRC states that it already provides additional support to address challenges faced by specific sectors through factsheets and guidance, and it is committed to continuing to support customers with compliance at a sector-specific level.
HM Treasury
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15 Recommendation Accepted
The complexity of the rules, and the perceived risk to hiring organisations of failing to...
Recommendation
The complexity of the rules, and the perceived risk to hiring organisations of failing to comply with them, could lead to changes in behaviour by both workers and hirers. For example, while firms must assess each role individually and not … Read more
Government Response Summary
The government agrees to conduct and publish specific research into the impacts of the IR35 reforms on contractors and labour markets, with a target implementation date of December 2023.
HM Treasury
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17 Recommendation Accepted
HMRC has not carried out research into these types of wider impacts from the perspective...
Recommendation
HMRC has not carried out research into these types of wider impacts from the perspective of workers, and is not convinced by evidence provided by others even where this indicates there may be significant issues.33 In its own research, HMRC … Read more
Government Response Summary
The government will conduct and publish specific research into the impacts of the IR35 reforms on contractors and labour markets, with a target implementation date of December 2023. They disagree with the committee's conclusion but agree with the recommendation.
HM Treasury
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19 Recommendation Accepted
It is not yet clear to what extent the IR35 changes may have contributed to...
Recommendation
It is not yet clear to what extent the IR35 changes may have contributed to these issues by affecting hiring practices and decisions made by contractors in key parts of the workforce.38 HMRC believes that the reforms are unlikely to … Read more
Government Response Summary
HMRC will proactively identify and work with sectors that have been particularly affected by the reforms to understand the challenges and how to address them, and will develop and implement a stakeholder engagement strategy. HMRC will provide the committee with an update in six months.
HM Treasury
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