Computerweekly.com recently reported that Network Rail appears to have performed a U-turn of its IR35 blanket decisions for the rail contractors it engages.
The Department for Transport’s 2020/21 accounts show that over 70% of Network Rail’s contractors are now deemed to be working outside of IR35.(1)
This is a welcome move, if it is a planned one, for rail contractors across the UK.
The DfT’s accounts showed that its executive bodies and agencies engaged 1,912 contractors during the financial year, with 1,025 being deemed to be working outside IR35. 1,323 of the contractors were engaged by Network Rail, with 977 (74%) of them assessed as being outside IR35.
This is in stark contracts to the figures for the previous financial year in which of the 538 contractors engaged by Network Rail, 99% of them were classed as working inside IR35.
The accounts also confirmed that all the contractor engagements were assessed using the CEST tool (Check Employment Status for Tax), but in the case of contractors working on the HS2 project contractors were automatically assessed by HS2 as being within the scope of IR35 off-payroll working rules.
IR35 tax failings continue
Government departments are required by HM Treasury to publish details about off-payroll engagements in their accounts, which also needs to highlight the number of individuals working inside IR35.
Departments are also required to highlight additional taxes paid as a result of incorrect status determinations and other IR35 compliance failings.
This is how evidence of three other government departments, including HM Courts & Tribunal Service, the Home Office, and the Department for Work and Pensions fines for IR35 failings came to light recently.