IR35 Reform U-turn: What Does It Mean For You?
As the government issued advice on social distancing and self-isolation, and businesses across the country took drastic measures in order to keep operations moving, many were campaigning for the IR35 reform to be delayed.
And as if they listened to our prayers, on Tuesday 17th March, Chief Treasury Secretary Steve Barclay announced that the controversial measures would not go ahead in April as planned. Instead, the off-payroll working rules would be deferred until 2021 – in a bid to protect the economy from the recent coronavirus outbreak.
In this blog, we explore exactly what this U-turn means…
Deferral not a cancellation
It cannot be denied that a key reason for the delay is the coronavirus outbreak and the huge impact on the economy and workforce. While a number of changes to help the self-employed and small businesses were introduced in the Chancellor’s Budget, many are arguing that it’s not enough as UK organisations close left, right and centre.
Despite the criticism that Rishi Sunak received after not directly mentioning the rules in his speech, news of the delay will be welcomed by many. However, it’s important to remember that the decision is “a deferral, not a cancellation, and the government remains committed to reintroducing this policy”.
In short, the changes can’t be ignored and all too soon another IR35 reform deadline will be looming.
Too little too late?
While the delay offers businesses extra time to ensure they are accurately assessing the status of their contractors without the fear of HMRC sanctions, some have already made drastic changes to the way they engage with contractors. A lot of top talent have turned away as a result of blanket ban decisions.
Those contractors who have been affected by these decisions have said that too much harm has already been done. There’s also no hint of the government scrapping the IR35 reform altogether.
Industry leaders are now continuing their campaign against the legislation, fighting against zero rights employment and urging for a recognised tax system for contracting and freelancing.
To put it simply, contractors will continue to determine their IR35 status and deduct the necessary NICs and tax. While those businesses that haven’t yet brought in measures for the reform may be feeling smug, changes are still coming. And, the next 12 months offer valuable time for end clients and agencies to prepare for the reform.
The pause also means businesses and contractor freelancers can focus all of their efforts into the wider challenges that Britain is going to face over the coming weeks.
Workr Group is here to help you meet your responsibilities and maintain business as usual. And this includes market-leading accounting, personal tax and umbrella employment solutions to suit all circumstances.
So, whether you started to prepare for the 2020 deadline or not, get in touch with our team on 0208 1060 000 or drop us an email at IR35support@workrgroup.com to ensure that it doesn’t have a detrimental impact on you and your work come 2021. The alternative is that you risk losing key revenue streams, talent and your competitive advantage.
In the meantime, we have also created an IR35 Hub to help you keep updated with the proposed changes and get prepared.