The Chancellor’s first Spring Statement has been met with positive feedback from the recruitment industry, partly for what has been left out. Tom Hadley, Recruitment & Employment Confederation (REC) director of policy said: “It’s encouraging that the government has so far not brought forward a consultation on IR35 in its spring statement. We hope that the government is instead focussing on a more holistic approach to employment status, tying into recommendations from the Matthew Taylor review.
Hadley notes that the REC has been lobbying for sometime, saying introducing changes to IR35 in the private sector would be premature as the impact of the public sector changes is not yet fully known. Indeed, there are issues with implementation that need to be rectified. “The majority of our members say it was implemented badly and the employment status for tax tool is still not up to scratch,” he says.
“The focus on education and skills, including additional funding for construction skills and T-level preparation, are welcome,” Hadleys says, “especially in light on ongoing staff shortages picked up on in our monthly data. We will continue to push for the Apprenticeship Levy to evolve into a broader training levy that recruiters can use to boost skills and progression of temporary and contract workers on their books.”
Julia Kermode, chief executive of The Freelancer & Contractor Services Association (FCSA) is also pleased that there has been no mention of IR35. “The Chancellor told us that today’s Spring Statement would not be a major fiscal event so I am pleased that he has been true to his word,” she said. “It was a positively upbeat economic forecast by Mr Hammond and it was no surprise that he chose not to use today’s Statement to say anything new about his plans to roll-out IR35 reforms into the private sector. With no mention, we hope that it shows that the government has listened to FCSA’s many concerns and the impact the changes have had on the public sector over the last year and we will continue to make our voice heard on behalf of the UK’s hard-working contractors and freelancers that a private sector roll-out will be hugely damaging for them and the UK economy.”
Kermode argues that the government’s suggestion that the public sector changes have seen an increase in compliance are not necessity substantialted. “More numbers on the payroll which has seen an increase in tax and NICs into the Treasury’s coffers does not indicate an improvement in compliance but simply that more people are on the payroll,’ she notes, “and many have been wrongly put there.
“It is widely acknowledged that some public sector employers have taken blanket decisions that have seen genuinely self-employed contractors being pushed onto the payroll inappropriately.”
Kermode says genuine contractors will have overpaid in tax so will seek to reclaim their overpayments in due course. However the real figures on this will not emerge until after January 2019.