More clarity is needed around IR35 off payroll working rules, the Association of Professional staffing Companies said in a statement on Monday. Though the organisation welcomed the off payroll working set proposals in response to a now-closed HMRC consultation, it highlighted areas for improvement if the plans are to support the recruitment market.

“We recognise the need to introduce the Off Payroll set off and the proposals outlined are certainly a step in the right direction to ensuring fair taxes are being paid without the potential for double taxation inadvertently impacting the deemed employer, which can often be SME recruitment firms,” Tania Bowers, global public policy director at APSCo, said in a statement.

“However, this is a highly complex issue and we do feel more clarity is needed,” Bowers said. “Under the proposals, there is the potential that set off processes could be delayed due to appeals made by the worker or the intermediary. Given the complexities in this issue, we are likely to see grounds for appeal submitted due to misunderstandings which will, ultimately, have a greater impact on the deemed employer.”

Concerns also arose about confusion.

“The fact that it is not retrospective has created the need for a two-tier system which accommodates zero tax payments for the worker (if they claim a refund) prior to 1st April 2024 and the set off mechanism post 1st April. This creates confusion for the supply chain and is likely to result in double taxation prior to the implementation of the set off mechanism,” she said.

“The issue around data transfer and transparency across the supply chain also prevails,” Bowers said. “We believe that there needs to be a statutory obligation for information to be supplied prior to the start of an engagement to prevent individuals deliberately withholding information and ensure recruiters aren’t disadvantaged.”

SIA’s Lexicon describes IR35 as “the popular name given to the ‘Intermediaries’ legislation introduced by the UK government in April 2000, to counter tax avoidance through the disguised employment of employees as independent contractors engaged ‘off-payroll’ through a limited company owned or controlled by them.”

For the recent news regarding IR35, SIA corporate members can view SIA’s Europe Legal Update Q2 2023 released Monday.