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Tom Cooksey, Managing Director of Elements discusses how recruitment businesses can work through today’s tough economy.

Evidence shows that CEST is moving in the wrong direction and is more proof that the tool is leaving businesses in limbo, unsure of whether an engagement should be inside or outside of IR35.

This multifaceted IR35 solution not only provides us with the ability to do status determinations in a very robust way, there’s also the facility to actually underwrite everything that’s taking place with insurance products.

“It is now expected that MTD will cost £1.3Bn which is £1Bn more than was originally budgeted in 2016 of £226m.”

Innovate UK was found to have engaged some contractors who should have been considered inside IR35 and subject to Income Tax and National Insurance Contributions, which has given rise to a £36 million tax bill.

This year’s annual whitepaper from Kingsbridge Contractor Insurance has taken a closer look at what has changed over the last 12-months and with almost 2,000 businesses including contractors, recruiters and end clients responding to the whitepaper survey, some interesting data has emerged.

In a recent survey by Kingsbridge Contractor Insurance, 87% of recruiters reported that they had taken steps to insure their tax, interest, and penalties risk should HMRC investigate their business under the Off-Payroll (IR35) Rules.

HMRC were shown the red card in their case against Match of the Day presenter - Gary Lineker. The former footballer won his case after it was shown that he had direct contracts between the BBC and BT Sport.

Following private sector IR35 reform in April 2021, HMRC compliance activity was indeed always a matter of ‘When, not if’, so it comes as no surprise that in November 2022 they started sending out off-payroll compliance letters.

HMRC are currently issuing letters for conducting compliance checks into the application of the off payroll working rules for the tax year ending 5th April 2022. These letters are causing some panic and confusion in the industry.

Andy Vessey, Head of Tax at Kingsbridge Contractor Insurance said, “SME’s are the backbone of the UK’s economy, so this extra time to deal with MTD will no doubt be a welcome respite.

Shadow Chancellor, Rachel Reeves compared the government to “pickpockets,” saying they had forced the country into a “doom loop” of low growth, high taxes, and high inflation. By reference to ‘pickpocket’ I think she summed up Hunt and his proposals fairly accurately.