IR35 – Delayed; but not forgotten
Yesterday (17th March 2020) the Government announced that they would be postponing the rollout of IR35 changes into the private sector due to the Coronavirus outbreak.
In the video below, despite the Minister referring to ‘off roll payroll working rules‘ (maybe indicating that he has no real idea what they are), he confirms that the changes will be tabled again ready for implementation in April 2021.
This comes far too late for many genuine contractors and associated services such as accountants who have had to close their businesses down as clients imposed blanket bans or ‘Inside’ determinations requiring the engagement of Umbrella companies and significant reductions in income.
It also comes the day after HMRC provided evidence to the House of Lords and were found seriously wanting in their response to scrutiny. While the House of Lords cannot force Government to defer the bill we have to hope that this contributed to the decision to pause the rollout (regardless of what they say).
The #StopTheOffPayrollTax campaign has been very active on Twitter and in organising a march on Parliament – but it appears that it took the Global Coronavirus Pandemic for the Government to realise that the proposed implementation and it’s consequences were out of step with the rescue packages it had announced for ‘regular businesses’, i.e. not the self-employed.
Many people think that it’s just IT Contractors that were going to be affected but it soon became clear that the flexible workforce is woven throughout our society. From the hospitality sector to veterinary surgeries, from the NHS and pharmacies to driving instructors. As the extent of the impact became more widely understood the noise started to grow.
But when Dr Iain Campbell started to highlight the strain that the draconian changes to the IR35 legislation would bring to the front-line NHS staff treating those infected with the Coronavirus did things become very real indeed.
So What Now?
Well we are not out of the woods yet – not by a long shot.
In the above video clip the Government confirm that this is a delay and not a cancellation of the changes being rolled out into the private sector.
So, despite all the evidence the Governments standpoint is remains that;
‘People doing the same job should be taxed the same way’
– The UK Government and HMRC
Apparently this is regardless of the fact that they will not receive the additional benefits that the tax contributions buy their employed counterparts, e.g. statutory sick pay.
The last few months has been a stark warning that unless the legislation is changed or proper guidance is provided to end-clients then we will be in the same position twelve months from now. Teetering on the edge of a flexible workforce implosion.
I think it’s far more likely that nothing will change from the Government apart from a renewed desire to get the changes implemented – so it’s down to the end-clients to get up to speed with the ins and outs of IR35, unless they want to see contractors walking off site in their droves (and they will – that’s been shown!).
Working Outside IR35 is not (in my opinion) that hard and by making very few changes to working conditions most (but not all) of the roles determined to be Inside can easily be moved Outside IR35- and in a manner which can be defended if need be.
The problem is that end-clients don’t understand IR35 enough to be able to say with confidence that the legislation does not apply to a role. This is further compounded by the fear that HMRC will come after them for tax which is deemed to be unpaid should they disagree with the employment status determination.
It is this fear that has left the flexible workforce facing extinction – being forced to make a choice between contract termination or being ’employed for tax purposes’, but not for employment rights!
But the onus doesn’t lay solely with the end-clients – we, the flexible workforce, need to take these twelve months to help them understand what Outside IR35 means and why we are so important to them.
And it’s not only the end-client that needs to be brought up to speed.
We all know that there are contractors out there who are operating contrary to the legislation (knowingly or otherwise). They need to be educated as to how to operate in a compliant manner or called out as a disguised employee.
People are on Twitter claiming victory but we are a long, long way from winning!
The Government seem to accept that the changes were going to have a massive negative impact on a large number of businesses, otherwise the suspension of rollout due to the ‘ongoing spread of Covid-19 to help buinesses and individuals‘ would make little sense.
If they are set on this course of action then the flexible workforce and the end-clients we offer services to need to be ready for the changes which seem inevitable.
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