Agencies fear private extension of IR35 public sector rules

Recruitment and employment law specialists Lawspeed ( conducted a seminar on the new IR35 public sector rules on the 21st June 2017. The seminar’s audience mostly consisted of recruitment agencies with a specific focus on servicing the public sector. The general consensus for attendees and one of the key take away messages was that the new IR35 public sector rules are a disaster and would be extended to the private sector with the next two years.

Agencies fear private extension of IR35 public sector rules


Adrian Marlowe, Managing Director of Lawspeed explained that “Our brief today is to explain the rules and point to the options that they create. I am on record as saying that the legislation is badly drafted and I stand by that.”

Referring to the stance that the hirer becomes the fee payer automatically in certain circumstances, Marlowe said, “This is truly extraordinary, and HMRC does not appear to have thought this through. Wherever legislation contains anomalies and ambiguities, HMRC can expect those affected to review their operations, and it is incumbent on us to explain the issues and possibilities that follow. That these rules will cause confusion and disruption in the short term is in no doubt whatsoever, but some clear options do exist.

The Lawspeed seminar was titled ‘knowledge is power’ and focused on what actions recruitment agencies could take to protect margins and relationships with public sector hirers. Senior legal consultant, Ben Grover stated “The first thing is to know who you are dealing with, it is critical to know whether a client is a public authority and this may not always be clear. Once you are sure the rules apply then make sure they are followed. For example, use of the terms ‘outside or inside IR35’ has no place within the legislation, and therefore no impact.

Associate director of Lawspeed, Theresa Mimnagh added “Another golden rule is to thoroughly check the service provider who is maintaining that it can relieve you of your liabilities. There is a lot of legislation in play in this tax area and what may appear to be a simple solution could turn out to bite you in the back.

Adrian Marlowe concluded the seminar stating “HMRC currently says that it has no plans to extend these rules, but early wins for HMRC may regulationschange that. However, it is really important that agencies focus on the detail and work with the options that the legislation allows for. By carefully navigating the difficulties that the wording of the law creates, agencies can not only minimise risk but create a long term solution that is acceptable to all parties.

Source: Recruitment International ( June 30th 2017 – Agencies believe new IR35 rules to extend to private sector within two years


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