A blanket determination is the broad application of an IR35 status to a large group of off-payroll workers without due consideration or assessment.
Whilst role-based assessments are considered compliant in the eyes of HMRC, the blanket application of a determination is not compliant with the rules.
Applying blanket determinations or banning the use of contractors altogether can lead to recruitment difficulties.
Stephen Barclay, Minister of State for the Department of Health and Social Care, stated that “58% of central public bodies have not experienced problems with filling off-payroll worker vacancies and 63% have not experienced an increase in contractor rates payable as a result of the new legislation.”
Although 58% may have not experienced problems, that means 42% are experiencing difficulty in filling vacancies, which is almost half of the central public bodies.
Whilst operating outside IR35, contractors are not taxed the same as employees, and therefore do not need to seek employment rights such as paid holidays; however, if operating within IR35, they are taxed the same as any other employee would be, but are still not entitled to the same rights.
In late September 2018, Susan Winchester, an inside-IR35 contractor engaged by HMRC themselves, successfully claimed for unpaid holiday pay of more than £4,000 which she claimed she was entitled to in an out-of-court settlement. Ms Winchester was contracted as an agency worker and therefore entitled to employment rights. HMRC decided to settle out of court and allowed Ms Winchester to claim what she was entitled to, setting in motion more noise that these rights must be considered, and to move forward with reform in the private sector without considering these changes would essentially be breaking the Government’s promise to support small business.
This gives a warning to any organisation looking to apply IR35 as a risk-averse strategy to attempt to curb any liability, that a risk will still remain for defending against employment disputes.