Several constituents have written to me about the Government’s IR35 reforms in the public sector and their plans to extend them to the private sector. I have been looking into the impact of IR35 in the public sector and spoken to a number of constituents about their personal experiences of it too.
The Government’s assessment of the progress of the IR35 reforms in the public sector contrasts sharply with the experience of people that I have spoken to and some of their own data published in May 2018. Whilst HMRC has declared it a “success” their own independent research concluded that 30% of public bodies found it harder to fill vacancies after the reform and 10% had not been able to deal with each contractor individually, leading to an increased risk that people were being incorrectly taxed.
When HMRC assessed satisfaction levels with the new IR35 rules, it surveyed public bodies rather than the individuals whose earnings and taxes were affected by the new rules.
Labour has been clear that on tax reform, the focus should be on the wealthiest 5% of earners and the largest corporate entities. In terms of clamping down on tax avoidance this means focusing on the large multinational corporations like Starbucks and Amazon, who earn make billions in the UK but pay very little by way of corporation tax.
To achieve changes, we need to back the European Commission’s proposal for country by country tax and profit declarations in Europe so we can stop these companies avoiding tax by funnelling money to Ireland or Luxembourg, a method that large multinationals use to avoid almost £6 billion in tax revenues every year.
I have raised with the Chancellor of the Exchequer, how the Government intends to work with other EU countries after we leave the EU to tackle tax avoidance, but he could only confirm that co-operation would continue, rather than how it will continue.
I will continue to look to raise my concerns regarding the IR35 reforms with the Chancellor.