Third government department coughs to IR35 miscalculation
A third government department owes millions to HMRC after incorrectly applying contractor tax liabilities despite using the tax inspectorate’s own calculator, causing accounting experts to ponder “who's next?” in the latest IR35 debacle.
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This is all eminently unsurprising. One incompetent civil service department creates a worse than useless online tool to determine IR35 status. Another incompetent civil service department uses said tool. Not just a case of rubbish in, rubbish out, but instead rubbish in, said rubbish made even more rubbish, rubbish squared out.
One government department investigates another department. Result is that one government department has to pay money to another government department. It’s a zero sum game paid for by the taxpayer.
Yes; there are no incentives to be efficient in the civil service. Quite the opposite. The quote here sums things up nicely: https://www.goodreads.com/quotes/40705-but-the-plans-were-on-display-on-...
IR35 is and has always been, entirely unfit for any purpose. The government and businesses have wasted much time and much more money on this foolish legislation, brought in by Red Dawn Primarolo under the aegis of Blair, the grinning monster of Iraq.
Ir35 should be scrapped forthwith.
It seems to me that the issue is not CREST but the whole basis of the legislation. If tax manipulation was the clear reason for the need for IR 35 then the solution would be clear too.
A "muddy" solution indicates yto me a muddy ideal.
How can the government want to encourage more entrepreneurs and small business and then club them to death at birth?
Come on guys sort it out urgently
This IR35 nonsense should be scrapped. NI should be abolished and incorporated into general taxation (I am sure someone with a little nous would be able to demonstrate that the taxpayer would not be disadvantaged so it would not lose votes.) Once that is done there would be no question anyone was trying to avoid NI - which is what this is all about. UK plc would save the cost of civil servants fining each others' departments, and attempting to determine a completely valid business transaction is a tax wheeze, together with the associated legal costs. Can we all have some common sense please?
Common sense is not permitted in HMRC or HMG departments - surely you realise that. There isn't a box to tick!
Under another hat, I've just had an email from the Health & Safety Executive who are opening an investigation to restrict the use of lead in ammunition...
It is shambolic that CEST is provided by the government as a tool to determine status, and then ends up being wrong!
Either let CEST results - when correctly answered - stand, simplify the foundational rules upon which it was built, or discontinue CEST. The current state of affairs makes the phrase 'unfit for purpose' sound like a compliment!
All Hail the magnificent and ever-effacious OTS.
The real issue is that the state does not understand the rules that the state puts in place
Does any MP understand any of this?
It is up to MPs to hold the State accountable for inept rules
The really telling thing is that HMRC were told but ignored it. Sounds familiar that does. They don't listen, barely pretend to and when it goes wrong they just look even more stupid. Anyone think of something similar today?
If all the people, in the department paying the tax, took a 10% pay cut until such time as the tax bill was settled, perhaps they would take more care in the future.
Seems that IR35 is also being identified as a partial cause of the current crisis over the shortage of lorry drivers. I have no idea what its effects are in the IT industry but I would suspect that it is not positive. There must be other areas of business where its impact is damaging to prospects and potential. What is needed is for the business department to carry out a study of the impact on our economy and then spell out to HMRC that their remit is to assess and collect tax and not do all they can to damage the tax generation ability of the workforce. My experience of the IT industry is that currently wages offered are substantially less than that obtained by the contractor market and retention is starting to become a factor as skilled labour shortages arise.
It needs the politicians to understand that post Covid and Brexit we are developing a different type of economy and if we are to succeed we need to remove the barriers that prevent it operating efficiently. One of those barriers is IR35 and HMRC's dire efforts to impose and implement it. If government departments are using contractors and getting classifications wrong then I don't see why business should be considered to be able to do any better. IR35 is a classic example of the need to redesign the tax system around a modern economy, not tinker at the edges.
If the DoJ cannot get it right what chance do the rest of us have?
Is it now the time for Government to rewrite the legislation to fit a 21st economy?