Budget 2016: The end of public sector contracting?
It was announced in the Spring Budget 2016 that engagers in the public sector will be responsible for deciding the IR35 status of their contractors from April 2017:
It is estimated that 20,000 Personal Services Company’s working in the public sector are avoiding tax (by not following IR35 rules correctly). The government believe this new measure, which will be subject to consultation, strengthens the public sector’s role in ensuring that the workers it engages comply with the correct tax rules.
The government issued an IR35 discussion document last summer, asking for input regarding a proposal to make all engagers responsible for ensuring IR35 compliance. By going after the public sector first, we will have to wait and see if this opens the door to all contracts having to comply with this new regime.