IR35 review to take place, announces Chancellor
With less than a fortnight to go until contractors head to the polls on 12th December, the Chancellor of the Exchequer, Sajid Javid, has pledged to review IR35 reform.
Speaking on Radio 4 programme, Money Box, Mr Javid said: “One thing in particular that I want to look at again are the proposed changes to IR35,” when asked by programme presenter, Paul Lewis, what the Conservative Party is doing specifically to support the self-employed.
The Chancellor then explained he wants “to make sure the proposed changes are right to take forward”, before saying he “thinks it makes sense to include the proposed IR35 changes” in the review into self-employment outlined in the Conservative Party manifesto.
A day later, Mr Javid confirmed the Government’s intention to review unpopular changes to the IR35 legislation. He Tweeted: “We’re committed to helping the self-employed, that’s why we’re going to review what more we can do. As I told Paul Lewis, our review will include planned reforms of IR35. We are the party of workers – whether employed or self-employed.”
We’re committed to helping the self-employed, that’s why we’re going to review what more we can do. As I told @paullewismoney, our review *will* include planned reforms of IR35. We are the party of workers – whether employed or self-employed. https://t.co/W5HBOeuK6e
— Sajid Javid (@sajidjavid) December 1, 2019
“The Government is listening”
Generally speaking, this news has been welcomed by contractors, who fear being unfairly placed inside the legislation when their medium and large private sector clients become responsible for determining status next April.
Seb Maley, CEO of IR35 specialist, Qdos, said: “A potential review into IR35 reform shows the Government is listening at long last.” Mr Maley also expects that the Chancellor’s pledge will be “widely welcomed by contractors who have understandably lost trust in this Government.”
Echoing Mr Maley’s thoughts was Dave Chaplin, who heads up the campaign ‘Stop the Off-payroll Tax.’ Mr Chaplin described the development as “a big breakthrough” and said: “The Conservatives have finally realised that the Off-Payroll Tax is a big vote loser.”
Contractors should still prepare for IR35 reform
Even so, IR35 specialists were quick to point out that a review into IR35 changes does not mean the changes will be scrapped. Mr Maley said a review is a sign of progress, but “reform is still set to be enforced in April 2020. As a result, contractors, recruitment agencies and private sector firms must work off the basis that it will be introduced until told otherwise.”
IR35 review must be “genuine”
Meanwhile, Mr Chaplin outlined the importance of a “genuine review”, which “must, of course, involve halting the Off-Payroll Tax roll-out to the private sector.” Of a similar opinion was Seb Maley, who said the review mustn’t be “lip service simply to win the votes of independent workers, who could be crucial in the outcome of the General Election.”
Mr Javid’s pledge to review the IR35 rules means the Conservatives have joined the Liberal Democrats and the Scottish National Party in pledging to examine the impact of the legislation. Although, unlike the Lib Dems and the SNP, the Tories did not mention IR35 specifically in their manifesto. This didn’t go unnoticed by Seb Maley either.
“Given the Liberal Democrats have been praised by contractors for promising a review already, you are left to wonder if this is why the Chancellor has now decided to discuss the legislation. IR35 was, as you might have noticed, absent from the Conservative Party manifesto.”
Review of IR35 changes not enough
The lobbying body, IPSE, that was established in response to the introduction of IR35, also had its say on the situation. While Deputy Director of Policy, Andy Chamberlain, welcomed the announcement, he did also express that a review is not enough at this stage.
“To prevent further damage, the parties must fully commit to halting the April 2020 roll-out. Freelancers and businesses must be reassured they will not be hit by these ill-conceived and hugely harmful tax changes in Spring.”
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