IR35 reform is set to be extended to the private sector in 2021 after a tabled amendment to the 2019-21 Finance Bill failed to gain the support of the Labour Party. The amendment, tabled by conservative MP David Davis, proposed that the private sector rollout be postponed until the tax year 2023-24. It followed a damming indictment of the reforms from the recent House of Lords Inquiry and continuous lobbying from campaigners.
The House of Commons debate saw MPs raise a number of issues with the controversial legislation. Central to the argument against the reforms is the issue of imposing ‘zero rights employment’ on vulnerable workers already struggling with the effects of the coronavirus pandemic. HMRC’s understanding of the employment law underpinning its own legislation is also thought to be inadequate, with a recent Upper Tribunal case finding the Treasury’s interpretation of MOO to be inaccurate.
However, despite the well-documented problems with the off-payroll legislation, Labour declined to vote on the amendment, making a majority vote redundant. It’s a disappointing result for stakeholders, who were hoping that the bold move by Davis against his own party may win cross-party support in commons. A number of MPs observed that a comprehensive independent review of off-payroll is required before any further action is taken, with Sir Ed Davey MP commenting: “A review must take place ahead of any legislation if it’s to be done in good faith, and I’m afraid the way Government has acted is a breach of faith to the 5m self-employed in our country.”
Although the government has said it will conduct another review before the April 2021 reforms, there is currently no clearly defined timescale, strategy or objective in place for this. Meanwhile, others expressed doubts about the Treasury’s predicted revenue from the measures, with Meg Hillier MP speaking about the unfair blanket assessments that have negatively impacted the economy as work is taken off-shore.
The failed vote means that the Finance Bill will now proceed to the Committee stage without the tabled amendment. However, all is not lost for campaigners with the opportunity for further amendments to be tabled during the Committee and Report stages. Groups against the reform are urging contractors to engage with their MPs on the issue to prevent the legislation entering statute in its current form.
This content has been supplied by IR35 Guru
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