Will the Government Delay IR35 Reform Again?

12th November, 2020
By 12. November 2020COVID-19, IR35, News
Will the Government Delay IR35 Reform Again?

When it comes to contractor concerns, a recent industry poll showed that 62% view IR35 reform as a greater threat than Covid-19 and Brexit combined. This could explain the slow uptake with self-employment, despite the spate of recent redundancies. In times of economic crisis, entrepreneurship and microbusinesses have traditionally played a critical part in economic recovery, helping to establish new markets and increasing flexible access to skills. With this in mind, it’s thought that the government will deliver a pro-enterprise budget in 2021. However, those who might be thinking about self-employment need assurance that the government is working in their interests and not against them.

Given the shift in responsibility for making IR35 determinations onto the end-client, it’s also the case that many businesses won’t be in the best shape to deal with any additional strain on their resources. Only recently, a glitch in the legislation regarding the ‘intermediary’ indicated that the legislation is far from refined. The Lords report concluded that the legislation is, in fact, riddled with issues, which are likely to cause problems when it comes to implementing the reforms next April.

Yet there’s been no indication that the government will further delay. The growing national debt means that the Treasury are keener than ever to stop losses in tax revenue attributed to noncompliance. Some sources have also suggested that there’s now little appetite from businesses to delay. Short of the reforms being abandoned altogether, many companies want a clear platform for restructuring, and that means knowing where they stand with IR35. Many have already had to begin the process of assessing their contractor workforce and entering into new contracts.

Despite endless speculation that the government will delay IR35 reform, the updates to their IR35 support resources on November 5th indicate their intention to go ahead. Given their limited resources, it seems likely that HMRC will move the focus firmly away from the contractor, with little inclination to use new information to open investigations into limited companies for previous tax years. The real issue for contractors will be how businesses and recruitment agencies decide to handle their new responsibilities – how many will make genuine determinations, and how many will resort to blanket policies in order to reduce risk.

This content has been supplied by IR35 Guru

Contractors, businesses and agencies are now advised to use the remaining time until April 2021 to prepare for the changes ahead. ContractingWISE has a wide range of options to help you keep your contracting career on track. To talk to a member of our team, call: 0203 642 8679

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