So, what is going to happen to IR35 in 2001. Well, if the PCG win the judicial review then IR35 will be withdrawn. If the PCG do not win, then below are some predictions from IR35Calc for the year 2001.
IR will target weak contractors
Contractors who have made no effort to ensure IR35 compliance in their contracts, and have not sorted out their working practices will be targeted by the IR. They will concentrate on the weak.
The government will be put off by contractors who have taken proper legal advice and are prepared for a potential IR35 battle. If they smell a strong fight and strong case they won't bother wasting their time chasing.
Government will back down whilst hailing IR35 a success
The government will not want to lose face by backing down on the IR35 measures. They appear to be completely unaware of the number of major bodies calling for IR35 to be scrapped or re thought. The fact is that there are aware, but are ignorant and not listening. More likely is that they have listened but cannot admit defeat.
Due to the enormous amount of effort (and expense) it will take to attempt to administer IR35, the government will need to carefully focus it's efforts to maximise the profits it makes from IR35.
The government will set up a small 'IR35 task force' that will target the weakest contractors - i.e. those who have not sorted out their contracts and working practices, and also do not have the will to fight IR35 to the end. The task force will collect a insignificant amount of extra tax The government will announce that the 'IR35 task force' made a profit and captured tax from those trying to steal it from nurses, schools and hospitals (etc), and thus declare IR35 a success.
So, what should you do now?
Every contractor agrees that tax evasion is illegal. They also believe in paying a fair amount of tax. However, they believe that they should be allowed to run their own companies and compete on the same level as larger corporations. IR35 does not allow them to do that.
At the moment there are no guarantees at all. We simply do not know what is categorically going to happen. The existing case law does not point to a definitive answer. It will be the first cases going through post April that decide how IR35 will proceed.
For the time being, IR35Calc recommends the following:
- Make sure you contract is IR35 compliant.
- Make sure your working practices are IR35 compliant and reflect the contract.
- Save your tax money just in case you get hit by IR35.
- Strap yourself in and wait to see what happens in March at the Judicial Review!!
[Note: These predictions are pure speculation as to events that may happen in the year 2001. IR35Calc does not accept any responsibility for actions taken by readers as a result of reading this article and believing every single word of it as the truth! But, watch this space!]