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Chancellor promises IR35 review

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.”

“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.”

Do you trust the Chancellor to deliver on his promise? Join the conversation…

By Contractor Weekly

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18 thoughts on “Chancellor promises IR35 review”

  1. Ying Tong

    This is how the sophists and charlatans fool most of the people most of the time.

    1. In the context of a guaranteed rise in income tax for everyone else the Libbies are apparently also promising a “review” of IR35 reforms which might result in a small group of workers earning at least £80,000/year having their tax liability reduced. To date the Libbies have not explained this curious anomaly in policy and credibility.

    2. Labour, with oblivion in prospect for the many not the few, is generously planning to scrap the reforms altogether. Comrade Corbyn is of course in the luxurious position where he could offer to scrap death while he’s about it, knowing that he will not be troubled by the complications of delivering it. The similar vacuum created by Michael Foot in the eighties was filled by Mandelson, Campbell, Blair, Brown and the rest of the “new” Labour gang. We don’t hear much of new Labour these days.

    3. Although no space could be found in the Conservative party manifesto for it, Chancellor Sajid Javid went a capella on Money Box at the weekend because he’s on the side of self-employed people y’see. He just needs to say it and he’s already said it. With no discernible sense of the ironies involved he appears to be holding out for belief the prospect of a Conservative government reviewing, or “looking at”, the policies implemented by a Conservative government. He does not dwell or even refer to the fact that IR35 in the public sector is not a proposal but legislation in place. How any change to IR35 reforms proposed for the private sector could take place without repealing those already in place in the public sector is not explained by Mr Javid and of course is absent from the Boris Beano. He probably didn’t mean to provide such clarity. It’s just the way he tells ‘em.

    4. Even the SNP has bizarrely managed to clamber aboard the passing bandwagon. It is more important than ever, they say on page 21 of the McManifesto, that everyone pays the taxes they owe for the public services they enjoy. They have legislated to close tax loopholes in Scotland and have led the fight against tax avoidance at Westminster. Consistent with which they will back tougher action on tax avoidance, including a review of the tax rules around intermediaries – known as the IR35 tax rule apparently. What could be fairer?

    One thing they all fear is apathy, the not unreasonable conclusion that they’re all the same. But each of them is offering the same tantalising, no commitment hook. Just give us a new five year dictatorship and all will be well. Trust me, I’m a politician.

  2. Hook Menu

    The same government that’s made things worse for contractors are now suddenly “on the side of the self employed” and will do a swift 180 “if you just vote for us”?

    Rubbish.

    I’m in the process of getting out of contracting; risk/reward not worth it.

  3. Fred Henderson

    How stupid do the Tories think we are? This is the third time they’re going to look at IR35 again. Each time so far, they just made it worse. They could have promised to abolish it: they didn’t
    If Labour gets in, the economy will boom and there will be a lot more work. But they’ll struggle to get in. We can only hope.

    • My good name

      The only boom you’ll hear if Labour get in will be the implosion of the UK economy……

      • AJ

        I doubt that. They are a very forward thinking party, looking to invest heavily in new technology and industry. When they were last in power they started the digital transformation of the NHS / GP records. This created plenty of contractor jobs, as demand for good quality skills increased. They also brought in 4G and proposed 5G networks, which also created contractor demand in those skills. They always look to advance and are all for the workers.

      • AJ

        I doubt that. They are a very forward thinking party, looking to invest heavily in new technology and industry. When they were last in power they started the digital transformation of the NHS / GP records. This created plenty of contractor jobs, as demand for good quality skills increased. They also brought in 4G and proposed 5G networks, which also created contractor demand in those skills. They always look to advance and are all for the workers. The Tories look out for themselves, the elite. They want the economy to crash so they can buy up cheap commodity for themselves. This is why they have pushed for a self inflicted austerity for the last 10 years. Every Tory government, from Thatcher, has taken this country into a self inflicted recession.

  4. Steve

    Went on the HAY-IT web-ex yesterday.. Hays are advising companies how to employ in/out IR35.. The bit that nobody seems to understand or they just have their head in the sand.. The gap between payroll and Ltd isn’t that great these days.. BUT the expenses is going to be a key factor.. Basically unless I can find work locally I won’t work. I cannot afford Hotels, flights if I can’t claim them.. A mediocre hotel for a year cost me £17k and that didn’t include breakfast or evening meal.. Living away from home needs to have some benefits else why would you bother? I’m personally also concerned that some not so honest companies are not going to pass on NI contributions (employee & employers)/income tax before going bust and leaving me to pay again to HMRC as this was happening in the 90’s.
    Some of the big companies have already moved staff around and I’ve heard work is moving outside the UK.. Brexit and IR35. The Dutch are doing extremely well out of this.
    For me and I suspect a lot of older contractors aged 40+. Retirement from IT is a big possibility. I can do a lesser job, go home every evening and not spend Sundays doing books and still earn more than take home (post IR35).
    Younger contractors state they’ll demand more money.. Yeh been there tried that, didn’t work.. companies have preventative messures for that one. Life is about to get a lot poorer..
    The only bonus I see and others agree.. Those useless project managers who we all helped and supported as it was to our advantage are going to struggle and will have to work a lot harder.

  5. guy

    I should imagine most contractors would be happy to pay 8 quid extra a month for a functional national health system and infrastructure.

    Sounds like Boris’ lot are getting desperate for votes, maybe they’ve seen some polling stats we haven’t yet.

    A tiny crumb like IR35 ain’t gonna swing any votes, we’re contractors cos we’re smart and good at what we do so we’ll see through this immediately as others have already posted here.

    Anyway the review would be ‘Yep, we were right all along so no change’

  6. CX

    Review?

    In 2012 Javid is on record as saying “The silly tax known as IR35 should be repealed”.

    Do if he already “knows” that, then what is there to “review”? Why not simply say the above now in 2019?

    More spin and sleight of hand.

    In on sense they may have a point. The real issue was people being forced down the Ltd Co route by unscrupulous agents trying to avoid Employers NI on what should have been a permanent position. But…

    What the hell is a “permanent” or so-called “employment” position? These statuses are so ill-defined that even the senior judges struggle, so it becomes clear that they are totally artificial inventions.

    The answer is to move away from Employers NI so that there are just workers who can all claim expenses (possibly verified by an accountant, as contractors do) and then people can take work wherever they can find it.

    My preference would be to gradually increase the current allowance of £2,000 until small then medium companies no longer pay it.

    If that were the outcome, I’d call that a real review.

  7. E

    There’s a huge distinction between “review” and “reverse”.

    Anyone who promises a review can easily deliver on their promise. It’s the conclusion of their review that matters.

    Do you seriously think they are going to conclude that IR35 shall be scrapped in the final months before it’s enactment?

    This rhetoric is just a useless carrot on a stick to win votes.

  8. Tony

    They really have no shame. The Conservatives brought in IR35 into the private sector. They have made the taxman untouchable whilst they chase the general population for any tiny tax discrepancy, but allow large corporations to get away with avoiding billions in tax revenue over the years. You cannot trust them, they have gone back on many of their previous promises. And the damage has already started with all of the banks now laying off their contractor work force. The nasty (Conservative) party really does live up to its name.

  9. TonyV

    They really have no shame. The Conservatives brought in IR35 into the private sector. They have made the taxman untouchable whilst they chase the general population for any tiny tax discrepancy, but allow large corporations to get away with avoiding billions in tax revenue over the years. You cannot trust them, they have gone back on many of their previous promises. And the damage has already started with all of the banks now laying off their contractor work force. The nasty (Conservative) party really does live up to its name.

    • Life Long Tory

      Labour introduced it.

      Labour have allowed HMRC to prosecute hard working tax paying people.

      Labour will enforce this again, it’s not just a Tory thing they are all at it.

      The only winner are the offshore companies.

      HMRC arranged special provision I believe to keep its contractors.

      No one to vote for.

      • GP

        Labour introduced it into the public sector. This made sense as it saved tax payers money. The taxman was mute under Labour. The taxman is king now under the Tories. The Tories have now not only introduced IR35 into the Private sector but at the same time made companies wanting to hire contractors liable for getting it wrong. That is pure evil. The companies are now laying off contractors in droves, killing off the market in one single swoop.

  10. Life Long Tory

    IR35

    Is the only issue for the next election.

    NONE of the parties are offering anything, and with my job being outsourced to India because of IR35.

    I will NOT be voting Tory

    Contract
    £75k + £15k vat = £25k taxes + £15k = HMRC getting £40k approx

    Paye same role
    £40k = HMRC getting £15k approx

    Employers off shoring
    £40k = HMRC GETTING £0.00 approx

    It’s utter madness.

  11. Ying Tong

    Boris has now published his great 100 day plan. It does not appear to include any IR35 review. That takes up to mid March 2020, with implementation of private sector reforms due to take effect after 5th April. Astute tactical voting could still extend his hung parliament purgatory.

  12. Life Long Tory

    To the financial institutions

    When you out source to India ..

    Will you be selling them
    mortgages?
    Pensions?
    Loans?
    Finance?

    NO you won’t and when the well paid roles are offshore will you be selling the Uk

    Mortgages?
    Pensions?
    Loans?
    Finance?

    NO because the UK worker will not be able to afford it !!!!

  13. Milleniumaire

    In a word “Bullsh*t”. Or is that two words? I’ll ask Boris, I’m sure he’ll tell the truth!

    Only a promise to cancel the rollout of private sector Off-payroll legislation will now get me to consider voting for the Conservatives, but then I also disagree with them on Brexit, University Tuition Fees, Private Rentals etc. all those policies that negatively affect me and my family.

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