At the beginning of January 2020, the Chancellor of the Exchequer, Sajid Javid, launched a review into the implementation of IR35 in the private sector. The results of the review are expected mid-February with the proposed changes to IR35 due to come into force on 6th April 2020.
What will the review cover?
Whilst initially it was hoped that the review would look at the feasibility of implementing IR35 in April 2020, it has since been made clear that the review is concerned with how the changes are implemented rather than if they should be. Financial secretary to the Treasury, Jesse Norman 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.”
What are the critics saying?
The announcement of a review was always hoped for, but due to the short time frame and limited scope it has not been well received by contractors or trade bodies.
Andy Chamberlain, Deputy Director of Policy at IPSE (the Association of Independent Professionals and the Self-Employed), said:
“Not only has the government not said it will pause the changes, it has also allocated far too little time for a full review and said nothing about selecting an independent chair.”
“Such a limited review would leave the freelance sector floundering.”
Tania Bowers, Legal Counsel at APSCo (the Association of Professional Staffing Companies), commented:
“While we are not altogether surprised by this announcement, we are disappointed that there is no intention of delaying incoming changes. APSCo has called for implementation to at least be delayed pending a further impact review and completion of an assessment on employment status. There is a clear need for a proper review, with adequate time to publish the outcome and recommendations of the review, and then roll out changes with certainty on final legislation. This timeline just doesn’t work.
“We, of course, support HMRC’s intention to ‘ensure smooth implementation of the reforms’. We also welcome further internal analysis of the CEST tool. However, the reality is that this review – at this time – is likely to create even more confusion.”
Contractors and public figures haven’t been any more optimistic, sharing their frustrations on social media:
Well said! Devastating impact already being felt in the recruitment sector (we have lost 20 per cent of our UK contractor base already due to IR35) due to our clients imposing blanket bans on the use of contractors.@sajidjavid stop these reforms now and undertake a proper review. https://t.co/0Duss1eeSh
— Dean turner (@deantrnr) January 30, 2020
I welcome the announcement of a review into IR35. But letting the implementation of IR35 go ahead during the review will seriously cost people and small businesses. It would be more sensible to defer implementation until 2021.
— David Davis (@DavidDavisMP) January 9, 2020
The proposals are a blunt instrument being applied crudely to take money from genuine self-employed workers and deprive them of work
This is not the way to make a difference with tax avoidance pic.twitter.com/EjxWUoLYM0
— Munira Wilson MP (@munirawilson) January 7, 2020
What will happen next?
Although we can't say for certain, it is likely that the proposed changes will go ahead in April 2020 possibly with a few minor tweaks by the Treasury but we aren’t holding our breath for major changes or postponement.
What should I do?
You should continue to prepare for IR35 by liaising with your end client and your accountant. You should be informed of the status of your assignment and whether the end client you are working for will be engaging PSC contractors post-April.
If you have any questions about IR35 you can call our free, no-obligation helpline on 0800 880 7056
ICS provide FCSA-accredited accountancy and employment solutions to contractors and small business owners across the UK. Whether you are working inside or outside of IR35, we have a solution. For more information please contact our New Business team on 0800 195 3750 or email email@example.com