Finance Bill

Written evidence submitted by Peter Aveyard, Director of Lead BA Limited (FB06)

I am sending you this evidence of my personal experience so that you are informed regarding the actual impact that IR35 regulations are having and will continue to have if they go ahead unreformed. I have considerable experience in my field and I enjoy an excellent reputation. My skills are usually in high demand.

In my evidence, I will cover -

The impact on my business

How the behaviour of end clients has changed

Why working inside IR35 is not practical.

My future prospects

Conclusion and recommendation

 Impact on my Business

In December of 2019, I completed my last contract with my client. Since then I have not worked. There were no standard contracts available between January and April 2020. There was a steep decline in work and the only work available was inside IR35.

 Behaviour of end clients

End clients were supposed to carry out fair assessments to determine supplier tax status. I can tell you from direct experienced this has not happened. End clients are simply making sweeping blanked assessments. Many financial companies simply stopped hiring IT professionals like myself. Most other end clients offered roles inside IR35 on their job specifications without engaging recruiters or contractors.

I was able to offer my clients ways of working that are clearly supplier-customer and comprehensive contract documentation to remove any ambiguity regarding the relationship, as-well-as providing them with IR35 indemnity insurance. Unfortunately, none of this counted. They seemed to be so afraid of falling foul of HMRC assessments putting them at great financial risk that they predetermined the working status without consultation. As a result, I found no work in my region between January and April. Since then we have been hit by Covid-19 and I still have not worked. It is now 29th May 2020.

 Why not work inside IR35?

Like many IT professionals, I started my own business to benefit as an entrepreneur and to gain personal freedoms. End clients are using IR35 to offer contracts that in-affect, puts the relationship on an employer, employee basis.

I am no longer able to function as an independent consultant in these circumstances and I am further restricted by the financial impact of the tax regime. As a result, the employer gets an employee with no working rights; who pays their National Insurance Contribution for them. What IR35 means to a contractor is that you are working as a contractor in name only. You are in-fact and employee with no rights.

 My future prospects

If IR35 goes ahead unreformed there is no future for me as an IT Contractor. Working inside IR35 is the worst of both worlds so I would have no alternative but to close my business and return to look for permanent employment. As an independent contractor, I not only offer a professional flexible service to my end clients, I also run training and mentoring services to the wider community in my field. All of this will end as a result of an unreformed IR35 when I return to permanent employment.

 Conclusion and recommendation

I believe that IR35 in its current form will be extremely damaging to the UK economy as it will greatly reduce, if not kill-off, the UK flexible workforce in the IT sector. I do understand the reason why it was introduced and I fully support the spirit of it for reducing tax avoidance but HMRC has failed to understand the wider damaging impact it is having in its current form.

I would support a simple supplier-client engagement levy that removes the need for the client to make an assessment. Because It is the client’s enforced assessment and their fear from HMRC of making the wrong assessment that is driving their bad behaviour and negative impact on contractors. The cost of that levy should be born by the end client and contractor industry-wide, to cover what HMRC believes to be the missing NICs contributions.

Above all I would ask that HRMC does not put thousands of small businesses out of business, surely this is counterproductive to their argument.

May 2020

 

Prepared 15th June 2020