This week's opinion: 14 March 2019

The consultation on the off-payroll rules will interest many readers. We knew the public sector rules would be extended to the private sector, but this document sets out for the first time some of the details.

A couple of things struck me. First, HMRC has recognised that the simple model of a personal service company working directly for an end user does not reflect the reality of what happens in practice, when there can be a long supply chain between the person doing the work and the business that they are working for. The consultation deals with this by looking at the responsibilities of the parties in the chain and the way that information has to be passed between them. IR35 does not cope with supply chains so this acknowledgement of the reality of the situation is welcome.

The other thing was the exemption for small businesses – they will not have to apply the rules and the personal service company will still have to decide whether IR35 applies. The aim is to reduce the administrative burden on small businesses. While I support anything that makes life easier for them I wonder whether it will lead to additional complexity as businesses have to decide whether they have to apply the rules. Might it also create a two-tier market, with individuals operating through service companies deciding on which contracts to take based on the size of the end user’s business?

However, I can’t help thinking that, had the government stuck to its original proposals 20 years ago to make the end user responsible for the operation of IR35, we could have been spared so much of the confusion and muddle.

If you do one thing…

Read the letter from Ruth Stanier, HMRC director general customer strategy and tax design, to the loan charge all party parliamentary group setting out HMRC’s position on the issue (tinyurl.com/appgcorr).

Andrew Hubbard, Editor in Chief