IR35 review must be prioritised, following Tory landslide victory
After Boris Johnson’s Conservative Party won its biggest majority since 1987 in last week’s General Election, IR35 experts have called on the Prime Minister to “act now” and conduct a review of the off-payroll working rules before the April 2020 roll-out.
Following Mr Johnson’s election win, where each major political party had addressed the issue of IR35 in the weeks leading up to it, the Prime Minister has now been told by IR35 specialists to deliver immediately on the promise his Chancellor, Sajid Javid, made to consult on the legislation.
Time is of the essence
IR35 experts – many of whom, like contractors, are sceptical that the Government will conduct a genuine review – have stressed the importance of holding it early in the new year. Qdos CEO, Seb Maley, was one commentator who voiced his opinion:
“Boris Johnson must act now,” Mr Maley explained. “A review of IR35 reform has to take place before April’s roll-out. If this timeframe is unrealistic, then changes need to be delayed or, better still, halted altogether.”
Similarily, IPSE’s CEO, Chris Bryce – who said the association was looking forward to working with the new Government – explained that the lobbying body would be “holding Chancellor Sajid Javid to his promise” to consult on IR35.
Given 6th April is on the horizon, Mr Bryce also urged the Government to halt the changes “while a full review is carried out. Time is short: the new Conservative Government must act now to protect this vital sector.”
Tories must deliver for contractors
Despite the Conservative Party introducing IR35 reform in the public sector in 2017 before committing to similar changes in the private sector in 2020, many contractors will have voted for the Tories based on its IR35 promise, said Mr Maley. Because of this, the Qdos CEO made it clear that “the Government now has a responsibility to honour its pledge to hold a genuine review of reform.”
Echoing Maley’s comments was Contractor Calculator founder, Dave Chaplin, who said: “I would urge the Prime Minister to now confirm that he will conduct a proper review, put the off-payroll roll-out on hold and work with the contracting community and stakeholders on devising how best to recognise contracting and freelancing in the tax system.”
Failure to delay changes “arrogant”
Given the Conservative Party was the last of the major political parties to address IR35 before the election, leaving it to December to do so, many IR35 specialists are unconvinced the Government will ultimately delay the changes. When focusing on this, FCSA’s Julia Kermode did not hold back:
“We are already seeing the very real impact of this damaging legislation on businesses and thousands of professionals. If they don’t delay then the promise was nothing short of an arrogant and disingenuous move to secure votes.”
Just how important is it that the Prime Minister delays IR35 reform? Join the conversation…
Good luck. It is like an authoritarian regime now. They’ll be taking every last penny from minorities while trying to look like they are looking after the majority.
Personally I think its too late.. I’ve heard a lot of the big service companies have already put in place moving the work abroad.. I’ve heard this from Directors of two big American companies and Agency managers.
For me, I’ve sold my industrial building, and now winding down our limited company.
Living outside of London and with the lack of local businesses (due to the lack of expences to claim) I don’t expect to work in IT after April 2020 due to the cost.
My particular skill is already in peak demand, so will only get worse.
One potental savior maybe working from home 100% but I’m not holding out too much hope on that one.. Most companies prefer 3 days in 2 days out.. Still the cost will be preventative.
How can it be considered lawful to tax an individual at source when they haven’t yet declared their income? If taxed at source presumably a rebate will be necessary once the individual has declared their income at the end of the tax year?
This is just silly. The Conservatives have promised to look at IR35 at every election, then made it worse not better.
Boris Johnson has been consistently untruthful throughout his career. Anyone who believes a single word he says is being daft.
The best we can hope for is that he’ll ignore IR35 completely. If he looks at it, any changes will be for the worse.
The draft legislation was draft for that reason to allow consultation. That time is now gone, it happened and the next step is making it law via the Budget or removing it from the Budget.
Sounds like Javaid could say, it was consulted on, it’s in the Finance Act ready for the Budget, it’s ‘oven ready’. 🙂
Or we have already killed the turkey, we will cook it and see what it tastes like
They will conduct their review as promised and conclude that it is beneficial for the nation so it stands. All of them would do the same regardless who is in charge. Those promises made before election were just to secure votes.
Boris is a lying clown who would promise anything for a vote – and his cabinet is the same. Or has anyone forgotten the NHS red bus – the one with the 350M a week?
If you expect he will review the IR35 reform, don t hold your breath.
Personally I am winding down the company and setting up a new business – abroad – and moving there later next year on my Italian passport so these idiots will get none of my taxes.
A pointless knee jerk bit of legislation that costs more to administer than it will ever collect. Much bigger fish to fry with the limited HMRC resources – the usual suspects of Amazon, Google etc. plus all that additional resource that will be required to monitor whatever dumb trade deals BoJo and his team get us into.
Yeah it’s an “authoritarian regime”… Get a grip.
Still don’t think IR35 will have a proper review though, no matter who’s in charge
I already have the review right here:
“It’s fine. No change required”
As if I’d have voted for that shower based on a flimsy IR35 promise chucked in at the last minute. I don’t trust them to not simply do the above.
All very well these good people calling for Boris to take action in press releases but has anyone actually directly urged the government? We can’t think that they will read the ipse newsletter
The only way to make them see sense is to vote with your feet and operate off shore via a foreign registered company. If the likes of Amazon can play games with residence status for tax purposes so can we.
They’ve had enough time to conduct a review, only a fool would be waiting for them to undertake a review now.
IR35 & Brexit, I’ve had enough of the UK.
Me, my dog and my little design consultancy are moving to new pastures in the EU where I can grow and develop without all this sh*t.
Today, my client advised as follows:
“After 28 February 2020, Q****** will no longer engage with individuals who provide their services via Personal Service Companies (PSC) or limited companies. Q****** will only engage with PAYE, agency workers or Umbrella workers, who will be subject to PAYE deductions for Income Tax and National Insurance Contributions (NIC). ”
My concern with this is what sort of message does this send to HMRC? I have had my contract and working conditions checked by Qdos who confirmed that I’m outside of IR35. My client hasn’t done this. They’re happy to engage with contractors when the contractor carries the potential risk of an IR35 enquiry/fine, but not when they do. Could HMRC interpret this that “well, he must have been inside IR35 before April 2020 then”?
I have had my accountant calculate the PAYE for the current offer from the company I contract with.
I will take home less than 50% and the revenue will receive 66% less than when I was a freelancer.
To mitigate the potential disruption the company has engaged an Indian offshore company, paying the same rate they previously paid for me, revenue tax take £0.00 approx.
IR35 is the equivalent of saying your guilty until the revenue find you innocent.
Freelance working in the UK will be dead once the new rules arrive.
Such a shame as we enter the bigger world.
A few years ago I was a member of the PCG, now IPSE. After the initial IR35 challenges failed and they didn’t go to the EU courts (a mistake IMO given the similar Lunn Poly case that won there) the focus went to winning cases and establishing case law – and lobbying government.
As the years rolled on, with more assurances that they had the ear of government… when the long-awaited review did nothing to change IR35 – and they later strengthened it – I realised that it was time to up sticks and leave that organisation.
It seemed to me that the PCG/IPSE may have decided that if IR35 were t go, then their raison d’etre would go also. Without IR35, why would anyone bother to join for a few insurances and a forum?
Throughout the life of IR35, Qdos has been a very useful ally for contractors, with contract reviews as part of their TLC35 insurance, covering the costs of tax, NI and penalties if you were to lose an IR35 enquiry.
With the proposed changes, Qdos would no longer be needed in that role. There’s no need for contract reviews for the worker, since the payer becomes liable. So… just as with the PCG before, it behoves us to wonder at the motivations of anyone who loses out – should we not be in favour of not being the people in the firing line for potentially massive retrospective payments?
Well, it depends. Not if the work dries up, due to clients doing as banks are doing now (refusing to engage with off-payroll contractors) or making blanket “inside” determinations.
But if it could be made to work as-is without the possible retrospective hit… maybe that benefits the worker.
I’m not saying that Qdos / Seb Maley are no longer onside. All I’m saying is to be aware that their interests are no longer necessarily aligned with those of the people doing the work at the coal face, so don’t take assertions at face value – think about them in context.
and after any ex contractors who take the paye route without hardly any of the benefits of actually being paid as a full time worker with a career in a company HMRC’s next trick will be I imagine to attempt to back date it as far as possible and then come after us all with the backdated interest, fines, fines on fines making at least 300% over what ever they think the number is, I really should have dealt with the Mafia rather than HMRC, nicer people with lower interest rates
Queen’s Speech in full: https://www.gov.uk/government/speeches/queens-speech-2019
No specific reference to review of IR35. “Measures will be brought forward to encourage flexible working” (by preventing it, presumably.)
John Redwood has written to the Chancellor asking for the date of the review. Redwood points out that it would need to begin almost immediately for it to have effect before the proposed implementation date of the reforms.
Wrong link above. Correct one: https://www.gov.uk/government/speeches/queens-speech-december-2019
My working practice has me firmly outside, but my risk adverse clients insists on putting all freelancers as inside.
I would rather move to Europe than work ‘inside’.
As a few comments have pointed out, your outside IR35 status is irrelevant when it comes to blue chips and medium companies, they blanket you as inside. I work for a large cable services provider, all contractors out April 20. Only a huge dip in revenue post IR35 will prove the folly of it, but for politicians and civil servants it isn’t a problem. They will be paid their salaries and fat pensions regardless of the damage they wreak.