Happy 10th Birthday to IR35
On March 9th 1999 the IR35 legislation was announced in the Chancellors budget speech and a Press Release was issued.
The annoucement spawned the birth of the PCG, the Professional
Contractors Group and an abundant array of "get round ir35" schemes and
plans.
Many professional freelancers and contractors carried on their
business as specialist advisors to organisations that needed their
skills for a specific project or role, and many of those people are
still in business today.
The HMRC have had some notable wins against PCG supported IR35
cases, and the PCG have had a large amount of wins that dont all make
the headlines.
IR35 is still with us, and if you are seriously in business on your
own account there are still plenty of engagements that, in our opinion,
fall outside the IR35 net.
It takes some work, and some change in attitude for both the
freelancer and the client, but working outside IR35 is still a
reasonable possibility in many cases.
Was it all worth it for HMRC ? I havent seen any figures but my gut
feeling is that its not really done a great deal for them. The
introduction of the MSC legislation was cited by them as partly due to
the failure of the IR35 legislation being applied. The HMRC concern
over Umbrella Companies is due to their growth, which was dramatic
after the introduction of IR35.
It also still seems that HMRC are struggling to stem the tax loss on
some of the offshore schemes that are still being marketed, and they do
not seem to have the resources to effectively police the correct
implementation of IR35.
The choice is always down to the freelancer themselves if they apply
the legislation to their contract or not, this decision should be based
on the opinion of a profesional advisor.
In many cases we see, we can give the advice and our clients can
ensure that their business is set up correctly to provide a good
defence if their IR35 status is challenged. But at the end of the day
if the client is not prepared to do their bit then their status will be
more difficult to defend with HMRC, and we see clients that dont want
to do what they need to.
IR35 seems here to stay, but so is Professional Freelancing and Contracting, so here is looking forward to the next 10 years.