A review of off-payroll working rules (IR35) has commenced to address concerns from businesses and affected individuals about how the legislation will be implemented.
The review will determine if any further steps can be taken to ensure that implementing the reforms happens smoothly and effectively. IR35 reforms are due to take effect on 6 April 2020.
The review will also assess whether any additional support is needed to ensure that the self-employed, who are not in scope of the rules, are not affected.
The government has announced it will also launch a separate review to explore how it can better support the self-employed. This includes improving access to finance and credit, making the tax system easier to navigate, and examining how better broadband can boost home working.
Financial secretary to the Treasury and Conservative MP for Hereford and South Herefordshire Jesse Norman said: “We recognise that concerns have been raised about the forthcoming reforms to the off-payroll working rules. The purpose of this consultation is to make sure that the implementation of these changes in April is as smooth as possible.”
The Recruitment and Employment Confederation (REC) has been urging the government to delay implementation until 2021 to conduct a full impact assessment of the IR35 changes that have already taken place in the public sector. The REC had expected chancellor Sajid Javid to answer questions on the future of IR35 during Treasury questions yesterday (7 Tuesday), but he did not.
Matt Fryer, head of legal services at Brookson Legal, said: “The government has not pledged to consider a repeal to the IR35 changes in the private sector, but to review ‘if any further steps can be taken to ensure the smooth and successful implementation of the reforms’. Businesses, contractors and recruiters should take [this] announcement as solid confirmation that the legislation will be coming into effect this April, as planned. The wording of the statement clearly indicates that there will be no last-minute policy U-turn. Anyone who has not taken the necessary action to prepare yet should do so now.
“The best that can be hoped of the review is that it will address the concerning trend of large users of contract labour bypassing their obligations under the new rules by enforcing blanket bans on the use of contractors in their supply chains,” he added.
Nick Woodward, CEO and founder of ETZ Payments, the back-office solution for the freelance recruitment sector said: “The review is good news for those who are concerned by the new IR35 rules but it will present uncertainty for workers, recruitment agencies and companies that have already adapted to the changes.
“The government needs to ensure that people have all the relevant correct information at their disposal to ensure they can be IR35 compliant before we reach April, and hopefully this review will provide swift clarity to all."
The reforms were announced in the 2018 Budget and are designed to tackle non-compliance with off-payroll working rules by making medium and large organisations in the private and third sectors responsible for determining the tax status of contractors they use.