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Calls to delay IR35 reform again are rejected 

April 2021 implementation date still stands

A tabled amendment to the Finance Bill calling for IR35 reform in the private sector to be delayed until 2023/24 has been rejected, as the Bill passed without a division. This means the controversial tax changes are still set to be rolled out on 6th April 2021.

David Davis MP, who recently announced he was to propose that further changes to IR35 should be postponed by an additional two years Tweeted his thoughts shortly after the debate: We were unable to vote on my IR35 amendment this afternoon as the House authorities did not select it. However, Labour were supporting the Government anyway, so we could not win – this time. Watch this space.”

In a session where Financial Secretary to the Treasury, Jesse Norman, reiterated his desire to introduce the changes next year to address the unfairness that he said currently exists, Mr Davis responded by quoting the recently published House of Lords report, that called for a widescale review of the legislation:

“They (the IR35 rules) have never worked satisfactorily throughout the whole of their 20-year history.”

“IR35 was the effect of reducing contractors to an undesirable halfway house and they do not enjoy the rights that come with employment yet they are considered employees for tax purposes. In short, they are zero-rights employees.”

Mr Davis then emphasised this point by stating: “That is zero-rights employees effectively created by the state, Minister.”

By ignoring the concerns raised not only by Mr Davis, but also several other MPs, including Sir Ed Davey, who said he was “beginning to fear this Government doesn’t understand the self-employed”, hopes of a longer delay have faded further. 

These changes will see contractors lose the right to determine their IR35 status when engaged by medium and large businesses from April 2021. This responsibility will be handed to the contractor’s client, with the fee-paying party in the supply chain to be transferred the liability. 

The news that the amendment was not voted on and that reform now looks very likely to be enforced is disappointing, albeit unsurprising, explained Qdos CEO, Seb Maley:

“It’s certainly disappointing that IR35 reform will not be delayed further, but it’s of no real surprise that the changes will go ahead. Many politicians have buried their head in the sand when it comes to the issue of IR35, while the Government has continually ignored compelling arguments that call for a rethink of the legislation. The Coronavirus crisis also means raising tax receipts has become a priority – even if that means contractors may be wrongly forced into ‘zero-rights employment’ as a result of the reforms.”

Given IR35 reform is now one stage closer to being included in the Finance Bill, Mr Maley urged private sector firms to continue preparing for what he described as “needless” and “short-sighted” changes:

“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 businesses that have banned contractors altogether or blanket-placed these workers inside the legislation should reconsider their stance immediately.”

Meanwhile, Dave Chaplin, Director of Stop the Off-Payroll Tax campaign called on contractors to take up the issue with their MPs and continue the fight:

“Pressure has built as we head to the Committee and Report stages of the Finance Bill. We will continue to campaign on behalf of the UK’s contractors and freelancers to prevent the legislation entering statute in its current form. We do now, however, need thousands of contractors to engage with their MPs to turn this around.”

By Contractor Weekly

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6 thoughts on “Calls to delay IR35 reform again are rejected ”

  1. Ying Tong

    Having been panicked into crashing the entire economy the government is unlikely to be much concerned about destroying the freelance market.

    Every government since 1992 has been a disaster in managing the economy.

  2. XY

    Sunak’s links to big business consultancy are suspicious. His father in law is one of the founders of Infosys, the 2nd largest Indian consultancy behind only Tata.

    Since they are the main winners in IR35, it seems a case of putting the fox in charge of the chicken coop.

    Independent public enquiry please.

    Also, a year’s delay is worse than implementing the changes now. So many were sitting on the bench in the run-up to April this year since few were hiring due to the uncertainty.

    Then we have cv19, so no-one is hiring again, then we’ll have another year of no hiring due to the delay.

    This is a complete joke from a supposedly Conservative government. Listen the HoL report and totally rethink IR35.

  3. Arnold Brian Foster

    I will be leaving the contractor market for good before IR35 is implemented in the private sector, I will either go Permanent or move Overseas as this country has never valued the good work we do in IT and the extra hours we put in to deliver a quality service.
    Goodbye Britain as you screw your contractor base and reduce your options to move forward after Covid19, you need us more than we need you.

  4. IR35 The Well Thought Through Rule

    Did anyone expect anything different?

    We were told another part truth about a review, but the damage is done and I see no future for freelancers in the UK.

    Too many hangers on feeding from the carcass.
    Tax man, Agent, Umbrella, Accountant, Insurers & Lawyers.

    The beast is dead.

  5. IR35 The Well Thought Through Rule

    Did anyone expect anything different?

    We were told another part truth about a review, but the damage is done and I see no future for freelancers in the UK.

    Too many hangers on feeding from the carcass.
    Tax man, Agent, Umbrella, Accountant, Insurers & Lawyers.

    The beast is dead.

  6. Omar Msd

    Finished last contract in Feb 2020. IR35 legislation meant there were very few roles on offer and those that were insisted that I had to use a umbrella company, of which they approve of…with only 1 umbrella available to select. The daily rates were in the £400-£600 inside IR35.
    Then Covid hit. Government confirmed that I was not a salary employee, had no rights like a perm employee to any scheme. Eventually, government did offer a scheme for independents, though my accountant showed me that grant should be the absolute last resort.

    Personal network. 35+ techies. All most all of them were in financial sector. Now none of them are.

    If you want to see how far this country has fallen. When they are taxing small limited businesses, they are salary employees, when the government needs to pay them – they are not employees. At the moment, no UK Court seems to interested in protecting the people.
    So next time you see the media writing stuff about the people buying Newcastle FC, human rights records, discrimination, etc. Have a look at the UK. Destroying entire livelihoods, telling them they should pay more tax but they have no rights. Who is the sick man or Europe?
    Which country used a single ‘science’ source for all scientific advice on Covid? Which is now proven to be wrong so comprehensively. Those idiots on the daily briefings are are clueless as the modelling data they used.

    For anyone wondering, full set Azure cloud, full set AWS, full set GCP, full set Cisco CCNP, full set VMware VCIX plus 2 decades experience. Self taught, self educated, self trained, extensive personal homelab. Contractors work damn hard at being good, I hope to join that group soon.

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