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Tory hopeful promises IR35 review if she becomes next PM
by The Editor at 10:52 26/08/22 (News on IR35)
One of the two contenders for the Tory Party Leadership - and the next Prime Minister - has promised a review of the IR35 should she win the battle for the top job.
Liz Truss had become the latest in a long line of politicians promised reviews and revisions to the controversial IR35 legislation, including the most recent 'off-payroll rules'. However, the freelance sector has learnt from past experiences that these promised reviews seldom result in any material change or reform.

In an interview with The Sun on Sunday, Conservative leadership hopeful, Liz Truss, said: ďThe changes that have been
made to IR35 are all about trying to treat the self-employed the same as big business. The fact is, if youíre self-employed, you donít get the same benefits as being in a big company. You donít get paid holidays, you didnít get those benefits. So the tax system should reflect that more.Ē

Liz Truss's recognition that the self-employed do not benefit from the same rights as employees and ergo that paying the same level of tax is unfair, contrasts sharply with her rival Rishi Sunakís comments. As Chancellor in 2020, Mr Sunak first introduced coronavirus support for the self-employed, after initially leaving them out of financial help schemes entirely. At that time, he said that by giving self-employed people similar support to that of employees, he could no longer justify them paying less tax, disregarding the gap between employment rights and tax status entirely.

Some commentators in the freelance sector felt that Ms Trussís remarks were more significant than promises made in the past, as they demonstrated a clear indication that she had heard what self-employed people across the UK are saying about the problems with IR35 and the tax system at large. However, as always with any promises relating to IR35, any optimism was tinged with a heavy dose of caution.

Ryan Dawson, IR35 Program Manager at contractor insurance providers, Kingsbridge, said: "Iím pleased that Truss has promised to review IR35 should she become the new PM. However, while positive, I wouldnít get too excited by this announcement. Reviews in the past have been nothing more than lip service despite industry stakeholders presenting compelling arguments and criticism of the legislation.

"Ultimately, the revenue being raised by IR35 reforms helps plug the gap left by COVID and Brexit. On the face of it, revenue that HMRC will do anything to get hold of. We now need an independent and holistic review, followed by clear action, that will make things fairer for engagers, agencies and workers who are equally struggling and being unfairly punished by new legislation.Ē

An IR35 review?
Kingsbridge outlines what it wouldlike to see in an IR35 review. They said:

  • First and foremost it needs to be a genuine review: wide-reaching, completely independent of HMRC, and with the involvement of affected stakeholders. It needs to address previous concerns raised by the House of Lords and by the Committee of Public Accounts, as well as concerns raised by businesses, recruiters, expert organisations such as Kingsbridge and, most importantly, the self-employed.
  • It needs to acknowledge, as Ms Truss has, that there is a gap between employment rights and tax status, and that there are benefits and safety nets afforded to employees that the self-employed simply do not have access to.
  • It needs to focus on more than just problems, it needs to actively recommend solutions to the tax system so that it works for everyone concerned. Kingsbridge believes this should include factors such as levelling up employment rights and measures to make the system simpler for everybody who uses it.

Kingsbridge said: "While we understand that itís unlikely that HMRC could be persuaded to scrap IR35 legislation entirely, we believe that they should be open to the recommendations of a holistic review that seeks to address the issues faced by many contractors, their clients and recruiters since the reforms were implemented and, in this way, create a system that is simpler and fairer. We hope that Liz Truss will be open to such a thorough review and subsequent reform should she find herself in Number 10 next month."

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The Editor

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