What You Need To Know About IR35

A review of proposed changes to IR35 legislation was launched on 7 January 2020, following a promise during the 2019 general election campaign.

The review will be completed by mid-February and will be used to highlight the growing concerns being expressed by both businesses and individuals.

From April 2020, medium to large businesses will be responsible for determining the tax status of their contractors, which will impact on the amount of tax both their contractors and they are to pay.

HM Treasury stated, “The review will determine if any further steps can be taken to ensure the smooth and successful implementation of the reforms.”

The Government are to also hold several discussions with those affected by the transformation. Additional analysis will be undertaken, including an evaluation of the much-maligned CEST tool.

Jesse Norman the Financial Secretary 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.”

HMRC are continuing to prepare organisations and individuals for the new legislation and will step this up through the delivery of extensive programmes of education and support activities. However, the fact that the legislative change is still being planned for April 2020 has caused a fair amount of criticism.

Julia Kermode, chief executive of The Freelancer & Contractor Services Association, said: “This seems to be another meaningless review from a government who seems intent on bulldozing ahead with its plans anyway. They are expecting the review to be completed by mid-February which is simply not long enough to consider the deeply complex range of issues that the off-payroll legislation is throwing up.”

“We have also learned today that the review will focus on the implementation of the reforms rather than the reforms themselves, which is not what was suggested and is not what is needed. I fear that today’s pledge is simply the government paying lip-service to empty election promises and nothing short of an insult.”

The Recruitment and Employment Confederation believe it will take a lot longer to assess the full impact of IR35 in the public sectors (which had this legislation rolled out to them in 2017) and have therefore advised the government to delay implementation until 2021.

Gary Shayler, CEO at leading recruiter Mane Contract Services also commented, “The government have indeed reviewed IR35 reforms as promised. However, I don’t believe they are giving the review the necessary attention it needs. A full review by April doesn’t sound realistic, their plans should be rescheduled for the end of 2020 or even later.”

An additional review to support those who are self-employed will also be implemented.

“In parallel to the review, HMRC will continue its comprehensive programme of education and support activities, proactively helping customers to prepare for the reform to off-payroll working rules in April 2020. This will include one-to-one engagement, webinars and workshops alongside targeted communications and support for customers, and their representatives to help them prepare for implementation on 6 April 2020.” Stated the HM Treasury.