In our latest employment law news roundup:-
Home Office Found Liable For IR35 Errors
Last week, we reported that the Department for Work and Pensions (DWP) has had to pay out £87.9 million in tax arrears, and interest on those arrears, on account of IR35 errors in terms of its procedures in identifying the correct employment status of its contractors between 2017-20. This was despite having used HMRC’s online Check Employment Status Tool (CEST) to conduct the employment status assessments, a tool that HMRC believe is up to the job, but which has been widely lambasted as defective.
Following on in the wake of the DWP shambles over their IR35 errors, news has now broken that the Home Office has been found liable for making exactly the same IR35 errors. After a review by the HMRC, the Home Office has to pay out £29.5 million in tax arrears, and interest on those arrears. The Home Office was also fined £4 million for carelessness, but that has now been suspended for 3 months to provide the Home Office with time to put reforms in place
A representative for the Home Office told Computer Weekly that the IR35 errors were a "small administrative error" and that "HMRC has recognised that the Home Office made every effort to resolve this issue quickly and effectively and has suspended the [£4m] penalty imposed while the cooperation is ongoing."
It is becoming obvious in relation to the IR35 errors that a lot of taxpayers money is being wasted, and that it is time to scrap IR35, both in the public sector and in the private sector. Moreover, the whole IR35 debacle is a classic case of a Government engaging in penny wise pound foolish conduct, in which the Government is scraping the bottom of the barrel for every last penny it can extract in tax, but which is completely undermining the greater flexibility that a labour market without IR35 delivers, and which delivers higher GDP growth and a higer tax take in the long run.
Commenting on the Home Office and DWP IR35 errors, the CEO of ContractorCalculator, Dave Chaplin, told Computer Weekly: "Certainty is what business need to succeed. If commercial contracts cannot be entered into with certainty, it destroys the fundamental fabric of a market economy. What we are now seeing is a consequence of the false promises that HMRC made to Parliament in the lead-up to the roll-out of the off-payroll legislation, and the uncertainty created by HMRC’s failed CEST tool."
Chaplin added: "This is extremely serious and since April 2021 the situation has got worse and Parliament should not tolerate it. HMRC appears to have no comprehension of how destructive their reforms have been to both people’s lives and the economy. Questions need to be asked."
18% Of Employers Are Planning To Make Redundancies As The Furlough Scheme Winds Down
A new survey by the The British Chambers of Commerce (BCC) has found that 18% of employers are planning to make redundancies as the coronavirus job retention scheme draws to a close. From the beginning of this month, the employers contribution has increased to 20%. The furlough scheme will end of the 30th September 2021
Number of Workers On Furlough Falls To Less Than 2 Million
New figures from the HMRC reveal that the number of workers on furlough had fallen to 1.9 million by the end of June 2021, a drop of 590,000 since the beginning of the month. The fall came ahead of the requirement from the 1st July 2021 for employers to contribute 10% towards the salaries of their furloughed staff, with the taxpayers contribution falling to 70%.
