‘Hypocritical’ HMRC has not engaged any contractors outside IR35 in past year, says Odos

IR35 specialist, Qdos, has reacted to the news that HMRC has not engaged any contractors outside the scope of the IR35 legislation in the past year – information that was revealed in the tax office’s Annual Report and Annual Accounts, published on 17th July.

The accounts show that across HMRC, Revenue and Customs Digital Technology Services (RCDTS) and Valuation Office Agency (VOA) departments, 1096 temporary off-payroll workers were engaged during the year ended 31st March 2023, earning £245 a day or more.

However, none of these workers was engaged outside of IR35, with the vast majority engaged via an umbrella company.

Qdos CEO, Seb Maley said, “Where do you start? The less said about how HMRC has handled the off-payroll working rules the better. On one hand, the tax office tells businesses that this reform will have little impact. Then when it comes to it, HMRC has banned contractors. It’s hypocritical – a case of ‘do as I say not as I do’.

“It’s no secret that many businesses have needlessly stopped engaging contractors because of the off-payroll working rules. But instead of leading by example and showing others that these rules are perfectly manageable, HMRC is insisting that all contractors work on the payroll. This is hardly leading by example.

“I don’t know what’s worse, HMRC’s attitude or the fact that forcing genuine contractors to work PAYE is a much more expensive way to engage flexible workers. So along with impacting contractors, HMRC is wasting taxpayers’ money.”