Yesterday, the Financial Times reported Chancellor Philip Hammond is to use his Spring Statement address tomorrow to announce the review.

Commenting on the reports, ARC chairman Adrian Marlowe told Recruiter in a statement that ARC welcomes any review that may result in the simplification of the current tests on employment status for tax purposes. 

“Direction supervision and control, mutuality of obligation, ingredients of the ‘master servant’ relationship are concepts that have had their day and simply serve to create confusion, take up court time and generate money for lawyers,” Marlowe said.

He added he would also like the review to create a proper “joined up” policy in terms of flexibility of workers in the UK, with different kinds of tax status in different circumstances matched with different appropriately protective rights.

But this isn’t the only review ARC would like to see. ARC’s lawyers have formally written to HM Revenue & Customs calling on the government not to implement proposed IR35 rules until a “proper and meaningful” review has taken place to address concerns about the legality of the reforms.

Last week, HMRC launched a new Employment Status Service (ESS) tool to determine the IR35 status of public sector contractors, which came under fire from contractor service providers. The IR35 rules, requiring public sector hirers and agencies to assess contractor IR35 status, are expected to apply from 6 April.

“Use of an online tool has always been claimed by HMRC as fundamental to the success of its new policy to require public sector hirers and agencies to assess IR35 and, where it applies, pay taxes on a PAYE basis,” Adrian Marlowe, ARC chairman said. “However, as our public law specialist lawyers Bindmans have now said in their carefully argued letter, ‘reforms (to IR35), whilst the online tool remains flawed …. in the ways set out…, would either be unlawful or lead to unlawfulness’.”

Marlowe described the government’s consultation process with regards to the use of the online tool as “deeply worrying”.

“From the outset we have expressed concerns, as have many others, as to how the tool could work legally in practice, given that HMRC says that it will stand by the result. The tool was always likely to be set up on a checklist basis, a methodology repeatedly ruled by the courts as the wrong approach. With few checks and balances in place over the programming of the tool, amongst other things, there is a real risk of unfair prejudice.

“Also it has not helped that progress of the government programme has been on a drip by drip basis over a long period. Even today, less than one week before the budget, HMRC has said that it is still evolving the tool and may change the draft legislation. So with no clear and final position in sight, the government appears determined to make hirers and agencies liable and use the tool regardless of the concerns.

“The fact that there should be IR35 reform is in no doubt, but the method used should not bring about the unlawfulness and problems that seem very apparent, as advised by our lawyers Bindmans.”

ARC has also set up a ‘fighting fund’ to further its objective being of creating a better legislative platform for contract and supply recruitment.

ARC advises interested parties to contact them on [email protected], while a copy of Bindmans’ letter to HMRC is available on request.