Why is HMRC’s benchmark to police the recruitment industry so narrow and negative-based? If it thinks that there might be money missing from its coffers, it reacts with the combative application of its secret weapon; bureaucracy legislation. Seldom supported by enough inspections or sanctions, its law-making merely stupefies and stultifies the majority of compliant agencies.
Changes in legislation are seemingly enacted by HMRC in complete isolation of the bigger picture. This includes reviewing existing legislation or even any attempt to investigate the possibilities that the industry can self-regulate. Even though government basks in the success of this industry’s ability to steer the UK economy to good health, its agents still treat the sector with suspicion and ignorance.
This lack of joining up the dots, compounded by the vague brush-stroke approach to language and covenants of the new False Self-Employment legislation is another example of how a jargon-laden exercise in obfuscation excludes anyone other than employment lawyers from being able to implement regulations that are no doubt meant to be good for the industry.
The lack of understanding that we are seeing from our own agency partners cannot be a criticism of the industry but rather HMRC; this lack of clarity stems from the following key points:
The luxury of time
Agencies, discounting the giants in the industry, are typically SMEs. They are operating in an industry experiencing shrinking margins and a plethora of legislation change, notably auto-enrolment and RTI. Keeping up with mooted changes to IR35 is distracting enough, never mind having to now embrace further changes that require agencies to prove a negative in evidencing a lack of direction, supervision and control as per this new legislation. This is a major distraction from earning an income, and frankly it will take time to define this legalese, never mind implement it. HMRC has not provided this time despite a range of industry leaders and organisations lobbying them to do so. Pragmatic common sense is obviously not included in HMRC’s vast employment lexicon.
Eeny, meeny, miny, moe
Agencies are unclear about their options, rebounding from the personal service contract (PSC) option because of the new Targeted Anti Avoidance Rule (TAAR) that is included in the new legislation to prevent mass incorporation to escape its rules. Taking advice from umbrella companies as opposed to tax experts has resulted in the migration of contractors to the umbrella model, but this has been unsatisfactory to many people working in the construction and engineering industry, who are already, in their opinion, well regulated by CIS. Agencies that seek to comply with the letter of this new law should in reality review the options, make sure they understand the legislation and seek correct legal and tax advice and then act accordingly based on their own circumstances.
We will be providing ongoing commentary on this new legislation in an effort to support our agency partners as they navigate these changes. If you have any questions that you would like us to respond to in the meantime, please don’t hesitate to ask us. We’re contactable on LinkedIn, Twitter and Facebook, or pick up the phone and call us on 0844846 5007.
