Revoke or Rethink Private Sector IR35 Changes due April 2021

Revoke or Rethink Private Sector IR35 Changes due April 2021

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Paul Delew started this petition to Rishi Sunak

UK IR35 changes originally proposed for April 2020 but delayed due to Covid 19 to April 2021 mean that a firm hiring consultants needs to exercise more diligence over the status of the contract to ensure that they are not hiring what HMRC would call a disguised employee who would contribute less in tax contribution.

This has been applied already to the public sector resulting in some contracts being placed in PAYE terms and some remaining off payroll and led to objections which has seen legal action.

The roll out to the private section though well intended does not take into account differences between other legislation that exists within the public but not private sector nor does it account in either sector for the impact on SME businesses.

The reasons to rethink the legislation being petitioned for are as follows but are by no means an exhaustive list;

  • Within the public sector tender processes need to be made available to all interested parties however in the private sector they are only open to private supplier lists. This means SME's are usually excluded from the original tender and can only form part of supporting larger projects by supplying associate services.
  • Without the tendering legislation larger consulting firms benefit disproportionately while smaller SME consultancies are excluded completely.
  • This impact the legislation proposed has been that larger companies who have traditionally used SME consultancy services have had to decide either to make individual decisions or place blanket rules over hiring avoiding the risk of later investigation this has reduced the market for SME businesses to operate in and will further reduce the market once implemented if not ending it for all but a few highly specialised providers.
  • The legislation takes no account of a  firms genuine efforts to win multiple clients or intent to act as a genuine business and considers only the role played within the client organisation and does not provide a clear enough framework that those who engage contract services feel they can rely on with out excessive risk.
  • The legislation takes no account of the market place where consulting services are offered on short term contracts and the SME carries the genuine risk of downtime.
  • The legislation creates a larger number of workers within the PAYE system who because of the terms offered have less rights then a full time worker but continue to carry the same risks.

as a summary the legislation favors larger firms over SME's because there is not supporting legislation opening up the tendering processes and does not recognise risk being run by genuine SME businesses who provide specialised services that firms continue to require such as project management and specialised technical and infrastructure support.

This petition asks that the legislation is discussed again with a view to how it can be made to stop the use of contracts creating disguised workers who do not contribute an appropriate amount of tax or stop unscrupulous employers for using them to take advantage of employees while also respecting and supporting genuine SME businesses.

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