The tax yield from IR35 is set to reach £1.5bn per year which is double the previous year. On the 16th March, Lord Bridges of Headley, Chair of the Economic Affairs Committee made a statement, "There is [also] the impact of IR35, that insidious policy that the Finance Bill Sub-Committee of this House has focused on. The yield on that has grown to £1.5 billion per year, which is double previous estimates."
This news came within two years of the implementation of the off payroll reforms within the private sector. Prior to these reforms, contractor companies would self-certify their IR35 status, but now responsibility for this sits with the clients instead. This means that many clients have chosen to ban limited company contractors rather than having to deal with the risk of wrongly categorising their employment status. As a result, there has been an increase in umbrella company working, and higher employers' NIC and PAYE receipts.
Seb Maley, CEO of tax status experts, Qdos says that he believes the £1.5bn number is accurate: "It certainly sounds believable. If you factor in the £250m or so of IR35-related bills that various government departments have received plus the number of contractors wrongly forced onto the payroll as a direct result of IR35 reform, it seems very plausible."
Andy Chamberlain, policy director at IPSE agreed with Lord Bridges comments and has questioned the HMRC for failing to "take steps to ensure clients are assessing their engagements with due care", citing IPSE research that "suggests this is not happening in many cases”, and continues by saying, "if the government is serious about growing the economy and bringing experienced retirees back into the labour market, it must look at how its own rules are making it harder for people to do so on their own terms".