IR35, formally known as off-payroll working rules, are a tool deployed by HM Revenue and Customs (HMRC), which checks if a contractor is genuine. There will be some occurrences where contractors “disguise” themselves, or are disguised by companies as employees for tax related purposes, and as a result IR35 is in place to ensure everyone pays their fair share of tax. However, changes have been slowly introduced as it relates to the system. In 2017, the Government changed how IR35 works in the public sector by shifting responsibility for status determination from contractors to their clients.
This was further extended in April 2021 – following a year of delays due to the pandemic – so the changes now also apply to the private sector.
It has been asserted, though, that changes to IR35 are a “forgotten” factor which is currently driving the UK’s problem with HGVs and the supply chain.
The Association of Independent Professionals and the Self-Employed (IPSE), has stated “chaos” has been left in the wake of IR35 changes.
IPSE has urged further consideration of the matter – including repealing the alterations made earlier in the year.
Andy Chamberlain, Director of Policy at IPSE said: “The changes to IR35 are the forgotten factor driving the HGV crisis.
“The IR35 changes have already had numerous unintended consequences from freelancers losing work left, right and centre, too many being forced into unregulated – and too often unscrupulous – umbrella companies. Now we can add fuel and food shortages to the list.
“IR35 is evidently not the only factor involved, but as research from the Road Haulage Association has shown, it is a key factor for more than half of drivers who are leaving the industry. This cannot be overlooked.
“But sadly, as with so much else to do with contractors and the self-employed, that is exactly what Government is doing yet again: overlooking this vital sector.”
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Mr Chamberlain also asserted a key issue derives from the changes made to IR35 back in April, which he states failed to look at the matter of disguised employment.
He stated that if HGV drivers should be employed by haulage firms, then current IR35 legislation does not amply address this consideration, hence the problems which have ensued.
Mr Chamberlain continued: “Working ‘inside IR35’ leaves drivers with the worst of both worlds: paying the premium of employment taxes without receiving any of the rights or protections employment should offer.
“If Government really wants to resolve the HGV crisis and get food and fuel flowing again, it must address the IR35 factor.
“We’ve been fighting the changes to IR35 for many years now – and continue to urge government to repeal them.
“At the very least, Government must turn its attention to the mess left in the wake of IR35.
“This crisis is just one unintended consequence of the changes, and unless government clears the confusion after the changes, there may be more to come.”
Recently, it was announced that up to 10,500 lorry drivers and poultry workers could be able to receive temporary UK visas to help tackle the supply chain issue currently being faced.
The Government confirmed 5,000 fuel tanker and food lorry drivers, alongside 5,500 poultry workers would be able to work in the UK – eligible for a three month period until Christmas Eve.
Transport Secretary Grant Shapps, said: “We are acting now but the industries must also play their part with working conditions continuing to improve and the deserved salary increases continuing to be maintained in order for companies to retain new drivers.”
Express.co.uk has contacted the Treasury for comment.