HMRC Needs to Address Employment Rights of Off-Payroll Workers Sep 16, 2018Views: 177
HM Revenue and Customers (HMRC) should address rights of contracting professionals deemed inside IR35 before further reform in the off-payroll working rules. This has been recommended by the leading tax advisory firm, Qdos Contractor.
According to Kate Cox, a spokesperson of Qdos Contractor, HMRC should give employment rights to contracting professionals if they operate inside IR35 and pay taxes. There are various cases that display HMRC’s clear disregard for employment rights when determining IR35 employment status.
The highly publicised case of the BBC TV presenter Ms. Christa Ackroyd, the presiding judge had noted that she was not entitled to holiday pay, sick pay, pension rights, maternity pay, and other employee benefits. This was because BBC had made a contract with her personal service company Christina Ackroyd Media, or CAM Ltd, instead of engaging Ms. Ackroyd as an employee.
HMRC seems to be splitting moral hairs when it comes to IR35 determination. The CEST tool that is used to determine employment status simply ignores employment rights. If a contracting professional has to pay taxes, then he or she should also be given employment rights. Deducting taxes without providing statutory employment benefits to contractors who are deemed to be inside IR35 is flagrant abuse of employee rights.
In the tribunal case involving IT contractor Ian Wells, the tribunal had explored the contractor’s integration with the client organisation. The presiding judge noted that the Mr. Wells did not have any managerial responsibilities and that due to the short tenure of employment, he cannot be considered as an employee since he was engaged on an on-the-need basis. No site-specific facilities or benefits were provided to the contractor while engaged through his PSC, Jensal Software etc.
Contracting professional should be provided employment rights similar to regular employees prior to deducting any taxes. The contractors who are considered inside IR35 and have tax and NIC contributions deducted on a PAYE basis at source should receive full entitlements to rights and benefits.
The Matthew Taylor report had emphasised about employment rights. Providing employment rights has been the main features in the modern work practices. However, the government has not responded to the recommendations of the review. This matter needs to be resolved with urgency before making any further reforms in the off-payroll working rules. The tax regulation agency needs to create legislations in order to protect and promote employment rights of contracting professionals.
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