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Ex-Financial Secretary calls for ‘dreaded’ IR35 to be abolished 

The man who helped orchestrate IR35 reform, Mel Stride, has called for the abolition of the ‘dreaded’ IR35 rules

Speaking at a Treasury committee hearing on 21st October, Mel Stride, who was instrumental in getting off-payroll reform over the line, has now apparently changed his stance, stating that it would be better if IR35 in its entirety was abolished.

He said: “Leading us all unfortunately to the dreaded IR35, I think we are all agreed this is best abolished as soon as possible.”

The IR35 legislation was introduced in 2000, with controversial reform in the public sector enforced in 2017. Further changes will arrive in the private sector on 6th April 2021, after having been delayed by one year due to the Coronavirus crisis.

Much like in the public sector, the reform will shift the responsibility for determining a contractor’s IR35 status from the individual to the medium and large businesses that engage them. As part of these changes, the risk will transfer from the contractor to the fee-paying party in the supply chain. 

Going ahead with reform seems ‘slightly perverse’ now

Following IR35 changes in the public sector three years ago, industry bodies criticised the reform for leading to widespread confusion and blanket IR35 determinations. However, the Treasury has maintained it was necessary to address the “fundamental unfairness” around non-compliance.

At the committee meeting in which Mel Stride said that IR35 should be scrapped, the impact of COVID-19 on the self-employed was also brought into sharp focus. Derek Cribb, CEO at the self-employed trade body IPSE, who was present, pointed out that millions of self-employed people have had very little to no government support during the pandemic.

He said: “We’ve seen half a million people falling out of self-employment in the last 6-9 months, according to ONS statistics [Office for National Statistics]. It seems slightly perverse to have the off-payroll legislation coming in when you want to encourage people to be flexible and to help the UK economy out of a crisis.”

HMRC has struggled with IR35 for 20 years

This is not the first time that calls for IR35 to be completely reviewed have been voiced. In April of this year, the House of Lords published a damning report, which found that the changes to the off-payroll rules would put a great burden on businesses and were unfair on contractors.

It urged the government to rethink the tax rules, criticised the taxman’s controversial tool (CEST), which it described as “well short” of what is required, and said making businesses responsible for enforcing legislation that HMRC itself “struggled with for 20 years” was not right.

Attendees at the recent Treasury committee meeting, including IPSE’s Cribb, highlighted the disappointing response from the government to the report as well as its failure to implement the recommendations from the Taylor review in 2017.

Calling for IR35 abolition is ‘nothing new’

Despite the calls for the abolition of these rules by Mel Stride, Dave Chaplin, CEO and founder of Contractor Calculator remains sceptical. He said: “Everyone has been talking about the need to do away with IR35 for 20 years. This is nothing new. Unfortunately, the political will isn’t there to change matters, even if the potential outcome is a functioning tax system.”

Seb Maley, CEO at Qdos, added: “That Mel Stride of all people is calling for IR35 to be abolished is ironic, given he was one of the driving forces behind reform in the private sector. And anyway, it seems too little too late. The changes are set in stone and will be enforced on 6th April 2021 – the date upon which private sector businesses need to be in a position to assess IR35 status fairly.”

By Contractor Weekly

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11 thoughts on “Ex-Financial Secretary calls for ‘dreaded’ IR35 to be abolished ”

  1. Ex-Contractor

    Now that nothing is likely to change the course of IR35 coming into effect, our Right Honourable friend has something to say. Empty words come to mind.

    • Andrew

      This. Look at what politicians do, not what they say. The rest of us are defined by our actions to people that matter not aspirational empty often toxic words. This bunch are masters of self interest, manipulating hopes and fears and playing off one section of society against another.

  2. Stephen Parrott

    And of course the CEO of Qdos is stating the policy is ‘set in stone’ as he has made all his money from contractors taking out ir35 insurance policies.
    I think we have seen that in these trying times the landscape has changed and political decisions can be reversed at the drop of a hat..

  3. Rob

    So old podgy pants (Stride) decided to say that IR35 is a mistake, al we need now is for him to admit the Loan Charge is wrong as well and all will be right with the world. These people are incredulous, and yet they keep getting voted back in….

  4. XYXY

    Good luck getting IR35 reform past Sunak’s father in law (co-founder of the 2nd largest Indian consultancy) – and consultancies are the big winners from IR35.

    The way to beat IR35 now is to have Employers NI abolished/removed. Imagine a world where it doesn’t exist… now the difference between employed and self-employed are only a couple of % difference between Employees NI and Class2/Class4 under Schedule D.

    Yeah there’s the expenses thing, but that’s relatively minor and although a separate issue… imagine if the cost of delivering one’s own labour was tax-deductible for ALL workers…

    Nothing left to worry about. IR35 can stay, it would make no difference to anything any more.

  5. RS

    Agreed on abolishing Employers NI. I cant agree on expenses though, this is the single biggest issue for me – and one of the most “unfair” parts of IR35 – no employee would be expected to pay for travel and accommodation whilst on residential training or project work, yet contractors are expected to do so. Paying for legitimate business expenses from my net pay (given businesses won’t want to increase day rates or offer additional cover for expenses) makes previously viable contracts untenable.

    All our discussions are for nought though in any case, as 1) the self employed are an easy target to expect to help repay Rishi Sunaks free money schemes deployed during covid, which were widely abused. 2) Rishi and friends are too lazy to properly analyse and investigate IR35 reform and its impacts – it will just be rolled out regardless (and the above poster is correct also, Rishi has a personal vested interest in seeing this devastating policy brought to bear, which is another nail in the coffin).

    I do hate to be all doom and gloom about this but the only option I see is to prepare to foster and strengthen client relationships outside the UK and take contracts with these clients wherever possible avoiding UK work – this benefits no one in the UK through additional employment or related work, and reduces the skillset available to those clients within the UK, but I dont see what other options small businesses and contractors in the uk have left.

    • XYXY

      Thanks for your reply, RS.

      I think you misunderstood me regarding expenses. I am saying that ALL workers should be able to claim expenses (at least, the cost of supplying their labour – so travel, subsistence including stay-away costs).

      At present an employee can be reimbursed by their employer when on company business, but their normal home-to-work is seen as not a deductible expense…

      Why not? That cost would not be incurred if they didn’t work where they do.

      Getting some flexibility into the UK workforce would be a good thing and the cost of taking a job far away is prohibitive as things stand.

  6. To little too late

    Oh wow so a donkey finally realised that what he forces through is wrong and now with no really chance of it ever happening looks for some form of forgiveness

    So sorry MR PLONKER you created this FUBAR and you are despised by millions in the UK

    When you see the UK IT work being shipped offshore in the millions YOU can hang your head in shame knowing it WAS YOU WHO MADE IT HAPPEN

    11 months no work now on UC THAT IS YOUR FAULT

    1,000+ for every IT job

    The only word for you begins with B and ends in D

  7. Ajay Bandlamudi

    Hi All, one day or other IR35 will come in to your life. Finally you will be working inside IR35.

    So simple we all need to embrace new ways of winning work. Start avoiding Recruitment agents, other channels like LinkedIn, thought leadership and the best thing is, direct clients bring work at higher margins than sharing your spoils with recruiters.

    To delve into the finer points of winning direct work is the best way.

    I will give a good example what I believe in and I always contemplate “Contacts bring contracts”. Started my career in 2004 with Lloyds TSB as a test Analyst to Teat Manager in 2006 with in the same program so out of Lloyds TSB in 2007 as Test Manager, in Lloyds made good influences. Hence my Program directed signed me up for a role in UBS as Project Test Manager later worked for all top 10 Largest UK Retail Banks now in Bank Of England. My rummage for job is not with agents only with my associates, straight from clients then agents. Hence my company is now registered as a preferred supplier in most of top banks.

    In simple increasing your career opportunities is increasing your business.

    Consequently, we all should try finding jobs which can fetch good money, try to get jobs from companies and get your company registered as preferred supplier and increase your pay slip and develop your business. I know it sounds simple but its hard however its your need now so do it now OR work for agents inside IR35 and share all your earnings to agents and to umbrella companies.

    For any guidance feel free to contact me or whatsapp me happy to help..! I am on Linkedin too.

    Good luck to you all.

    Regards
    Ajay Bandlamudi
    Email: ajay@theajay.com

    • Anne Glover

      Very true should start trying other options. as contractors stop sharing your earnings with agents and Umbrella companies.

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