Over the course of the election campaign, almost every party has had their say on how IR35 should be handled going forward. With the election concluded, we’re now able to focus our full attention on all legislation changes including the upcoming IR35 review. Although, there are still a number of possibilities about how an IR35 review could manifest itself.
With the Conservatives now in full control, businesses and contractors have a better grasp of what to expect in 2020.
Of course, with Brexit lingering and future trade agreements to be arranged, it begs the question of what form the review will take and when it will arrive. Here, we answer that question as best we can.
The Conservatives have long been in favour of an IR35 legislation review. Of course, now that the election is over, such financial policies will likely take front and centre stage of all economic discussion.
However, despite what most contractors and clients who engaged in their services might prefer, the government may be unable to devote the energy towards it immediately.
Even if the current Tory government hope to only make mild adjustments, it is likely they would be required to run the legislation through a hand-selected committee – or even Parliament – first.
Therefore, it remains to be seen whether the review will be a half-hearted assessment (with little to no scrutiny) or an in-depth examination of the impact this will have on the contracting world.
The alternative scenario is that the Conservative Party decide to bench the legislation until it can be reviewed in October 2020. If this is the case, there will be a period of uncertainty whereby all effected parties will need to adhere to legislation (as it stands) and engage contractors as normal – despite knowing that it could change.
Already, agencies and businesses who rely on contractors are having to factor the proposed changes into their contracts. But it’s uncertain whether the new government will expect this to continue.
As frustrating as that may sound, it makes sense. Sajid Javid has publicly stated that extra finances will need to be put aside in order to prepare for a no deal exit. If that is true, then the prospect of reviewing IR35 policies may seem fairly innocuous in comparison. Plus, this would allow for a more thorough discussion by a committee and Parliament.
Should Jeremy Corbyn have found himself at Number 10, the future of IR35 would have been no more certain. Not satisfied with rejecting the proposed IR35 legislation, Corbyn had every intention of disassembling umbrella companies as a whole. Why? Because he believed they don’t pay the correct amount of tax and NI. They do.
In fact, one reason contractors choose umbrella companies in the first place is so they can ensure that they are working entirely within the realms of HMRC best practice. By removing this option, he would effectively be limiting the choices of contractors across the UK – and put them at the mercy of ‘other’ pay options that do not afford full employment rights and benefits.
Prepare regardless with Workr
Whatever happens going forward, one thing is almost certain – IR35 in one form or another will take effect in 2020. The Conservatives have long been in favour of this reform – and it’s unlikely they’ll reverse their decision.
That’s why Workr are committing ourselves, between now and April, to ensure all those effected won’t suffer the ire of HMRC. We’ll be updating our IR35 Hub regularly with the latest news, insights and advice so you can prepare for the incoming changes.
If you’d be interested in having your situation assessed by our experts, get in touch. Our team will even offer alternatives should your process fall on the wrong side of the taxman.