This means that on April 6, 2021, contractors will lose the right to set their own IR35 status when engaged by medium and large private sector companies. This will become the responsibility of the company engaging the worker, with the liability transferred from the contractor to the fee-paying party.
These changes were introduced amid much complaints and ciriticism in the public sector a few years ago, and were scheduled to be rolled out in the private sector in April 2020. However, the Covid 19 pandemic forced a delay for a year. Some campaigners had hoped that this proposed amendment would increase that delay to the tax year 2023/24, but it was defeated by 254 votes to 317 at the Parliamentary Report and Third Reading Stage and now becomes part of the Finance Bill.
Qdos - No turning back
Seb Maley, from IR35 specialists, Qdos, said: “IR35 reform in the private sector has effectively now been signed off and will arrive in April 2021. Despite concerns raised by a number of MPs, who rightly exposed the flaws of this legislation and made it clear they do not believe changes are necessary, it seems there's no turning back now.
“The reform is short-sighted and if mismanaged poses a risk not just to contractors but to hiring organisations and recruiters. It’s therefore up to private sector firms to prepare for the changes, which can be managed with the right approach. However, work must start immediately - I can’t stress enough how important this is.
“For companies to compliantly engage genuine contractors beyond April 2021, they must avoid risk-averse policy decisions and instead prioritise fair and considered IR35 status assessments. Whilst our work alone shows that thousands of businesses will be ready for the changes, many other companies - from banks to oil firms and pharmaceutical giants - should rethink how they plan to manage this reform.”
Brookson - Clear timelines
Matt Fryer from contractor specialists, Brookson Legal, said: “With the Finance Bill passing through Report Stage and Third Reading in the House of Commons, changes to the off-payroll working rules in the private sector are now set for April 6 2021. The coronavirus pandemic bought businesses an extra year to get themselves ready but the fact is, many still weren’t ready for the original IR35 deadline this April with just weeks to go. Our ‘Ticking Timebomb’ research last year found that many businesses were woefully underprepared in the run up to the changes and were planning short cuts like blanket bans of all contractors.
“Jesse Norman MP has been clear, earlier in these discussions, that blanket assessments are not be sufficient. Hopefully lessons can now also be learned from the forthcoming report into the poorly managed introduction of changes in the public sector in 2017. Despite more pressing challenges presented by the coronavirus pandemic, we urge recruiters and hiring businesses to set out a clear timeline to ensure that they make the necessary preparations to ensure compliance. Now we have a confirmed date to plan towards, contractors will be looking for clarity from hirers on where they stand. Contractors should start speaking to their hirers and recruiters now in order to iron out any problems in good time.“
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