Senior Tory MP and ex-Minister, David Davis had called for changes to the off-payroll 'IR35' working rules in the private sector to be delayed until 2023/24.
However, the vote to approve the Finance Bill means IR35 reform is still set to be introduced in April 2021, as previously announced, with the Treasury revealing that a review of the changes will take place six months after their introduction.
The measures were originally intended for April 2020, but the Covid19 pandemic delayed its implementation by a year. Freelancer groups had hoped Mr Davies' amendment to delay it until 2023/24 would be favourably received in the current climate. Despite the support of several MPS, the Government was unmoved, as Treasury Minister, Jesse Norman, repeated that there was no reason to delay it further.
Qdos - Disappointment
Tax specialists Qdos accused the Government of 'burying its head in the sand' when dealing with criticism of its IR35 reform proposals.
Seb Maley from Qdos said: “It’s a big disappointment that IR35 reform will not be delayed, but then again it’s of no real surprise that the changes will go ahead next year. The Government has buried its head in the sand when it comes to IR35, continually ignoring compelling arguments that call for a rethink of the legislation. The Coronavirus crisis also means raising tax receipts has become a priority for the Treasury - even if that means contractors may be wrongly forced into ‘zero-rights employment’ as a result of the reforms.
“With less than a year until IR35 reform arrives in the private sector, businesses must continue their preparations. And companies that haven’t started yet must get to work. The changes are needless and short-sighted, but by taking a measured approach and prioritising accurate assessments, firms can continue to compliantly engage genuine contractors outside IR35. Meanwhile, the businesses that have banned contractors altogether or blanket-placed these workers inside the legislation should reconsider their stance immediately.”
Contractor accountancy group, Brookson, found some comfort in the Government's clarification that status determinations need to be made on an individual rather than the much-criticised 'blanket approach'.
Matt Fryer from Brookson said: “Without a further delay to the implementation of the IR35 changes, both contractors and their hirers should continue dialogues that have already opened prior to the coronavirus crisis. Jesse Norman MP’s clarification that status determinations must be made based on an individual basis will hopefully put an end to the blanket approaches that we have already seen in the private sector and give contractors confidence to challenge, through the client led status disagreement process, any inadequate determinations.
“Many of the mistakes made during the introduction of IR35 changes to the public sector in 2017 were repeated again by the private sector in the run up to the deferred April 2020 roll out. New government research into the public sector roll out is very much welcome. Hopefully that the findings will be reported in good time for lessons to be learnt by April 2021.”
Further IR35 information
For more information about all aspects of IR35, including the controversial IR35 reforms see Shout99's News on IR35 section.
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Susie Hughes © Shout99 2020