Industry leaders in recruitment write to government to delay upcoming IR35 changes
Posted on 30th January 2020 at 13:30
In a letter to the Chancellor of the Exchequer signed by fourteen recruitment organisations, the government has been urged to delay the IR35 reform due to take place in April, and to push it back to 2021. Signatories consisted of industry giants including the chairman of Reed, the CEO of Harvey Nash and the managing director of Hays.
This latest development in the controversial world of IR35 legislation has been met with widespread support from some of the leading voices in the realm of off payroll working, and will no doubt fuel more backing for the anti-IR35 protest and lobby day due to take place on Wednesday 12th February in Westminster.
IR35 background: refresh your memory
Off-payroll working rules (IR35) were introduced in the year 2000 to ensure that people who work as contractors through their own limited companies pay the same level of Income Tax and National Insurance Contributions as employees. Following a reform to the rules in April 2017, public-sector organisations who took on contractors became responsible for ensuring that both they and the workers they engage were paying the correct amount of tax, which has been an effective method of improving tax compliance.
At the Autumn Budget in 2017, the government revealed its plans to start a similar plan for tackling non-compliance in the private sector. A year later, during the Autumn Budget in 2018, it was announced that plans for the reform would be extended to medium and large organisations, and the changes would kick in from April this year.
What did the letter say?
The letter said that the proposed IR35 changes would “risk poorer treatment of contractors and compliant companies losing out to those who bend the rules”, and that the main concern is that “the effective regulation of umbrella companies government has promised will not be in place in time for April - creating huge opportunities for avoidance”.
Some contractors will be considering working through an umbrella company in response to the proposed IR35 reform, which was a substantial point of discussion throughout the letter. It serves as a worthwhile reminder that all independent workers must carry out due diligence of their own when retaining the services of a contractor.
Two major suggestions were proposed on how the issues outlined could be approached; to adopt an independent Chair and body to review the suggested off payroll working rules in the private sector in order to enhance the legitimacy of the government’s final position, and to take on board lessons learnt from the public sector implementation.
The letter finishes with a stark reminder that even though the UK labour market has gone through some tough times and shown its resilience, its toughness and strength should not be taken for granted – and we couldn’t agree more.
You can read the full letter here.
Get your IR35 Private Sector: 5-Step Action Pack now!
Nicola and the team at Effective Accounting have been preparing for this for months. We are fully prepared to work with contractors to help you to understand the changes, navigate the complex world of IR35 and in your communications with your client.
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Be proactive, take the initiative and get planning for April 2020!
Nicola J Sorrell
- Effective Accounting
Founder | Xero Champion | IR35 Expert
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