Shock Delay to IR35 Reform

18th March, 2020
By 18. March 2020IR35
Shock Delay to IR35 Reform

In a shock announcement the government has said they will delay the controversial IR35 reforms until 2021. The decision was taken yesterday evening in light of the ongoing spread of Covid-19 in order to help businesses and individuals cope in these difficult times.

Steve Barclay, the chief secretary to the Treasury said: “I can also announce this evening, madam deputy speaker, that the government is postponing the reforms to the off-payroll working rules, IR35, from April 2020 to the 6th April 2021.” Barclay said that move is part of a broad package of measures the Treasury has announced to protect the economy from the coronavirus outbreak.

Given that last week’s Budget confirmed that reform would still go ahead, few people saw this coming. Pressure from contractors and the current House of Lords Inquiry has clearly been instrumental in the decision to delay. Quizzing the witness for the Treasury, Lindsey Whyte, on Monday, the off-payroll inquiry chair Lord Forsyth was clearly dissatisfied by her stock response that simply repeated the Budget wording.

Repetition of an ‘official line’ has been the government’s approach throughout the off-payroll debacle. However, Lord Forsyth had clearly had enough, commenting to Ms White: “I know what was said in the Budget… What has been proposed in the Budget, I think, is generally acknowledged to be inadequate in terms of the scale of the [coronavirus] crisis. And it does seem rather perverse to add an additional burden of this kind on business that could easily be deferred for six or 12 months.”

The Lords inquiry had consistently produced evidence that the IR35 reforms have resulted in widespread non-compliancy from organisations who found themselves unprepared for the changes. This has already resulted in widespread damage to organisations such as the NHS, which have been left dangerously short-staffed as a result of the reforms in the public sector. The Lords also warned that the inevitable loss of work due to the virus for contractors deemed ‘inside IR35’ and effectively forced into ‘zero rights employment’ would prove catastrophic.

Despite the Government’s intentions to legislate next year, contractors, clients and industry stakeholders will no doubt welcome the valuable time granted by the delay. While private sector businesses will gain an extension in which to prepare themselves for the reforms, many stakeholders will be hoping that the reprieve could also provide an opportunity to overhaul the reforms in light of the compelling evidence heard during the Lords Inquiry.

This content has been supplied by IR35 Guru.

If you’ve been affected by the delay in the Off-Payroll reforms, or if you’re unsure about your options as a contractor, ContractingWise has a range of options to help you keep your contracting career on track. To talk to a member of our team, call: 0203 642 8679