The government has decided to delay the incoming IR35 rules due to the coronavirus pandemic.
Chief treasury secretary, Steve Barclay, said that the reforms will be pushed back to 6 April 2021. The move comes among a raft of announcements supporting small businesses last night (17 March).
However, Barclay stressed that it is “a deferral, not a cancellation, and the government remains committed to reintroducing this policy”.
Relieved but still frustrated
Business experts have welcomed the news but are unhappy that the government intends to plough ahead in 2021 without further consultation.
Qdos CEO, Seb Maley, commented:
“The government has seen sense and made the right call in these unique circumstances. Given the economic challenges that lie ahead of the UK, now certainly would not have been the right time to roll out needless tax changes that endanger hundreds of thousands of contractors’ livelihoods.
“It does give private sector firms vital time to prepare for reform, which can only be a good thing for contractors. What matters now is that businesses use this time wisely.”
Claire Brook, employment law partner at Aaron & Partners, thinks the announcement is overdue:
“Although this will come as welcome news to a huge number of employers, agencies and contractors there will also be many who believe this announcement has come far too late. Many businesses have already implemented their IR35 strategy and a significant number of contractors have already had contracts terminated.
“We have never seen a time where so many employment law changes have come into place so quickly, and we are seeing new developments each day. It’s been positive to see that during this time employers continue to seek solutions that will provide the best outcomes for their employees and businesses working together to support the community. It is important to reiterate that given the pace of legal change it is vital that businesses seek professional advice at this time to keep up to date.”
The end of IR35 reforms?
Others are hopeful that the IR35 delay will see the changes being scrapped altogether, despite the government saying otherwise.
James Poyser, CEO of inniAccounts and founder of offpayroll.org.uk, said:
“This will give time for the Lords review to be published, and we hope that the Treasury and HMRC listen to their recommendations before attempting to re-table this legislation for April 2021.”
FCSA chief executive, Julia Kermode, is concerned about the money that has already gone into complying with the reforms:
“We are aware through our evidence submitted to various government bodies, including the House of Lords, that some businesses have spent in excess of £700k in preparing for the private sector reforms which illustrates only the tip of the iceberg of the cost to businesses and the economy.
“I very much hope that some detailed analysis of the wider implications of this reform can be undertaken in the coming months in order to establish whether or not it should be scrapped entirely, rather than simply ploughing on in 12 months’ time.”
Dave Chaplin, director of the Stop The Off-Payroll Tax campaign and CEO of ContractorCalculator, said:
“We would like to thank our 2600 campaigners for their excellent and tenacious work and we thank all the MPs who raised their concerns with the Treasury and opposed the flawed policy.
“We must now keep pushing for changes to outlaw the disgrace of ‘zero rights employment’ and to make it illegal for firms to push employer’s taxation onto contractors. We must also push for the genuine review of IR35 legislation promised by the previous Chancellor, as part of the Conservatives planned review into self-employment.”
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