Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what methodology his Department used to calculate the cost of non-compliance with IR35 in the private sector.

The cost of non-compliance with IR35 in the private sector is projected to increase from £700 million in 2017/18 to £1.2 billion in 2022/23.

The costing is an estimate of the tax revenue lost due to companies considered to have taxable income within the scope of the intermediaries’ legislation not applying the legislation in full. The costing is underpinned by analysis of Corporation Tax data, Companies House data and Self-Assessment tax returns.

The methodology and assumptions used to produce the estimate are similar to the policy costing for the off-payroll working measure (applying only to intermediary engagements with public sector bodies) announced at Budget 2016, which has been certified by the Office for Budget Responsibility (OBR).