PAC report on implementing IR35 reforms

Key points

• The Public Accounts Committee’s (PAC) has investigated the effectiveness of the public sector implementation of the updated IR35 regime.
• The committee is highly critical of HMRC’s approach to the application and roll out of the updated off-payroll working rules.
• Central government departments have struggled to comply with the reforms and owe substantial back taxes.
• The PAC is concerned that it is too difficult for workers to challenge incorrect status determinations.
• The report states HMRC does not know what it costs each part of the labour supply chain to administer the reforms in practice.
• The government must address the inequitable tax and legal treatment of workers.

The IR35 off-payroll workers’ tax rules aim to prevent workers and recruitment agencies from positioning an intermediary between engagers and workers to avoid or reduce the worker’s income tax and National Insurance contributions (NICs). Such workers would typically use their own personal service company...