IR35 Forum Minutes

Introduction and Review of Action Points
1. Rowena Fletcher opened the meeting, introducing herself as Tracy Gale’s successor.
2. A review of the action points from the minutes of the meeting held in January 2013 was undertaken. See below for details.

Tax Arrangements of Public Sector Appointees
3. HMT introduced this item, providing a brief background to why the review had originated, including the Chief Secretary’s review of the number of off-payroll individuals engaged in Government Departments.
4. The review showed that Departments lacked the levers to check those people engaged, but not on the Departmental payroll, were paying the right amount of tax.
5. To provide Ministers with the assurance they need to ensure public sector workers are meeting their tax obligations, measures were set out by the Cabinet Office in published guidance.
6. In addition to publishing guidance, the HMT team work with Departments to support them in implementing the guidance.
7. They will be updating the Chief Secretary on the review shortly.
8. Forum members raised a number of questions and comments about the guidance as follows:
9. It was felt that there was a lack of consistency in the way Departments apply the guidance. An example was given of a contractor receiving different treatment from different Departments. HMT recognised this concern but explained that it is their role to provide guidelines to enable Departments to decide how to implement the assurance process. HMT will take the feedback into account when they update the guidance.
10. Forum members asked how a Department such as Transport could be expected to handle a tax matter. HMT advised that all Departments have an HMRC appointed Customer Relationship Manager (CRM) to advise them on tax related matters and would not be expected to be tax experts.
11. HMT said it was important to recognise that the guidelines sat in the wider framework that heads of Department are personally accountable for their Departments when appearing before the Parliamentary Committees.
12. The PCG said that they have written to the Chancellor and the Chief Secretary but have not had a response. ACTION POINT 12 – HMT to follow up.
13. HMT were grateful for this feedback and invited any further comments to be fed in to them via the Forum.
14. Members suggested that allowing external contract review services to be provided as evidence may be a route through this problem. They felt the HMRC Contract Review Service may be too slow for commercial contractors.
15. HMRC said they aim to complete contract reviews as soon as possible without undue delay but would look at the scope for improving turn-around times.
16. Members raised that the word ‘demonstrate’ used in Annex B of the Procurement policy guidance issued to Departments was a vague term. Members also raised the question of “What happens if you have an impasse? There was general consensus that the contract would end at that point.
17. There was general criticism that there was a pre-determined view that contractors should be inside IR35 and people of low risk are investigated.
18. Forum members advised that the issues outlined were encouraging contractors to move away from the public sector.
19. It is important for Departments to be able to bring in people on a temporary basis where there is no long-term requirement for their skills. The Government has made clear both in the review document and to Parliament that they value this flexible labour workforce and recognise that it is important that Departments are able to engage temporary workers to meet particular skills needs.

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