Government urged to “consider all options” in private sector IR35 consultation

While the question of whether IR35 off-payroll rules will be extended to the private sector is yet to be decided, PRISM, the trade association for payment intermediaries, is urging the government to consider all the options before releasing its consultation.

The association has stated that the rules that have already been introduced in to the public sector have resulted in increased complexity for the public sector who do not understand the rules and who have often taken a “no risk” blanket approach to the application of IR35 to the detriment of the workers. It also said that that workers have been given conflicting advice by their accountants and engagers as to whether they are inside/outside IR35, and many have seen pay reduced to employed levels while acquiring no employment rights.

PRISM has warned that the present IR35 rules as applied to the public sector have led to less, not more compliance. It has also proved to be more expensive, with rates of pay having to be increased to retain staff along with the additional costs of taking advice from IR35 and legal experts. These costs would not be feasible for many private sector firms.

Crawford Temple, CEO of PRISM, commented: “We have just seen one of the largest construction companies fail with one reason being cited as increasing costs to deliver. In 2014 there were significant changes that affected the construction industry, with many expert commentators warning that the changes would hit many companies in the sector who run long-term contracts that have already been costed, Carillion being a good example. This shows the importance of not rushing legislation through and giving businesses a clear direction and timeframe to amend their structures.

“A good example of this is the notice given to the soft drinks industry on the introduction of the sugar tax. Businesses were given three years’ notice of the change and the market has moved significantly, so much so that the chancellor confirmed that they would not collect as much tax as predicted. Business can and will adapt when given clear notice and direction together with adequate time to implement the changes.”