IR35 Review lambasted at launch

We wrote extensively last year about the forthcoming new rules about off-payroll working rules regarding contractors and the sometimes opaque differences between them and genuine staff members collectively known as IR35.


When is a review not a review? IR35 under spotlight

Sajid Javid

 

 

 

 

 

 

So it comes as no surprise to industry watchers and industry watcher watchers like ourselves that the government has announced, as promised before the general election, a review into IR35 before it comes into effect on 6 April. 

 

Last year Chancellor Sajid Javid said: “I want to make sure that the proposed changes are right to take forward. We’ve already said that we’re on the side of self-employed people. We will be having a review and I think it makes sense to include IR35 in that review.”

 

So far, so consulty. After all, 30,000 signed a petition to repeal the rules in November and it’s good to know you’re being listened to even if the ultimate decision goes against you, right?

 

Not so fast there. Jesse Norman MP, Financial Secretary to the Treasury, said: “We recognise that concerns have been raised about the forthcoming reforms to the off-payroll working rules. 

 

“The purpose of this consultation is to make sure that the implementation of these changes in April is as smooth as possible”. 

 

Stressing that it’s about making the implementation as smooth as possible kind of sounds like the decision has already been made, no?

 

Julia Kermode, Chief Executive of The Freelancer & Contractor Services Association (FCSA) agrees – and then some. 

 

“This seems to be another meaningless review from a government who seems intent on bulldozing ahead with its plans anyway.

 

“They are expecting the review to be completed by mid-February which is simply not long enough to consider the deeply complex range of issues that the off-payroll legislation is throwing up. 

 

“HMRC has stated that it will be continuing its preparations to roll out the reforms in April come what may. We have learned that the review will focus on implementation of the reforms rather than the reforms themselves which is not what was suggested and is not what is needed.

 

“I fear that today’s pledge is simply the government paying lip-service to empty election promises and nothing short of an insult.”

 

There are also unintended consequences that could play out if the implementation goes ahead as scheduled. 

 

Research has found that 41% of businesses would consider stopping working with contractors due to the requirements of the legislation. 

 

There’s reports that some companies have initiated a blanket ban on the hiring of contractors anticipating that the new rules will make hiring them too costly and time consuming. 

 

GlaxoSmithKline has reportedly ordered 1,500 contractors working for it to sign on to PAYE or be cut, with some banks including Barclays and RBS also implementing this approach. 

 

Many accountants are also alarmed at the prospect as they could see a loss of their freelance client base if they switch to PAYE.

 

A more sober response comes from the Association of Taxation Technicians (ATT) who are calling for the IR35 implementation to be delayed for at least a year. 

 

Jon Stride, co-chair of their technical steering group said: “As the Budget will not take place until 11 March 2020, the subsequent Finance Bill containing the legislation for these rules will only be published a little over three weeks before they are due to take effect.”

 

If you’re an accountant who’s worried that their carefully cultivated and cared for contractor customer base is about to evaporate overnight, or a freelance contractor who’s wondering what’s going to happen after 6 April then get in touch with us today

 

After a free initial consultation with an experienced expert advisor we can help plan out a strategy for you and your business no matter what the future might have in store. 

 

Our expertise in Creditors or Members Voluntary Liquidations (CVL/MVL), administrations and liquidations means that we have dealt with your situation before and can help you decide what you want to do next.

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