The Lords Select Committee has announced it will investigate the proposed extension to the off-payroll working rules and called on the parties impacted by the reform to contribute to the IR35 inquiry.
While scrutinising the Finance Bill 2019/20, the Lords Finance Bill Sub-Committee will focus specifically on IR35 reform, which will see contractors lose the right to determine their own IR35 status from 6th April unless they are engaged by a small private sector company.
With less than two months to go until controversial changes are enforced, Lord Forsyth of Drumlean, Chair of the Finance Bill Sub-Committee, said the Committee is “interested in how this change will work in practice, and how it relates to wider changes in working arrangements.”
Open until 25th February, the IR35 inquiry will take into consideration the opinions of contractors and businesses affected by the reform, as Lord Forsyth explained: “To inform or work we want to hear from as broad a range of people and organisations as possible. If you have a view on off-payroll working rules, please let us know what you think.”
The inquiry is being held while the Government conducts the IR35 review, which is also due to conclude this month. The Lords have said they will focus on a number of key areas.
The Committee will examine public sector IR35 reform which was introduced in 2017 and resulted in all public sector bodies becoming responsible for administering IR35 status. The Lords will ask the following:
With reports of risk-averse IR35 determinations and private sector businesses banning all contractors, the Lords will put the following forward for discussion:
The failings of HMRC’s IR35 tool, CEST, have been well-documented, so it’s no surprise that the Lords will look closely at the current guidance for determining IR35 status:
The news of the IR35 inquiry was well-received by experts, but it does not mean incoming reform will be scrapped or delayed. Additionally, when investigating the reform, Seb Maley, CEO of Qdos, made it clear that the Lords must consider the facts:
“Has public sector reform worked? No, not when you consider that thousands of contractors were unfairly forced inside IR35. Is CEST capable? In its current state, it simply isn’t fit for purpose. What effect might IR35 reform have on contractors? If mismanaged, there is a risk the private sector will repeat the mistakes made in the public sector.”
For more information and to contribute to the ongoing IR35 inquiry, please visit the Parliament website here.