IR35 Review Fails Expectations

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Chancellor’s IR35 review fails to live up to expectations.

John-Paul Toner

All eyes were on the Chancellor earlier this week as he provided an update on his pre-election commitment to a review of IR35.

For those concerned that the changes to the off-payroll working rules, due to come into force in April of this year, will do significant and lasting damage to the UK’s flexible labour force, there was hope that Sajid Javid’s review would be of a large enough scale that it would require a delay to the introduction of the new rules. Maybe for as much as 12 months.

Unfortunately, that isn’t the case, and not only will there be no delay to the implementation of the new rules, but the review itself will be a review of the implementation of the new rules and not the root and branch review of the new IR35 rules themselves and the potentially damaging impact they may have on our economy that those most impacted by the change in rules had hoped for.

To say that those concerned about the impact the new off-payroll working rules have been left feeling let down is an understatement. Julia Kermode, CEO of the Freelance & Contractor Services Association said “The review [focusing] on the implementation of the reforms rather than the reforms themselves…is not what was suggested [by Mr Javid]. [And it] is not what is needed. I fear that today’s [announced review] is simply the government paying lip-service to empty election promises and [is] nothing short of an insult.”

Strong stuff!

The Chancellor also announced that the review will be concluded by mid-February, and while a delay has not been completely ruled out, it does seem unlikely that there will now be one.

Plenty of people have asked since Javid’s announcement how those businesses and contractors affected by the forthcoming changes can prepare for them when it won’t be clear until after the review is concluded how they will be implemented, but answers to that question have not been forthcoming.

For Contract Scotland, our preparations continue. We wrote to our limited company contractor community on two occasions prior to Christmas providing an update on where those preparations are at.

We’re in the process of completing preliminary status determinations and it remains our goal to have those completed by the end of January.

In terms of engaging with clients, once those preliminary status determinations have been concluded we’ll be speaking with clients to share our findings (and their implications) and offer assistance and support. The new rules place new statutory obligations on our clients and we are keen, as far as possible, to help clients understand how best (and least disruptively) to perform those obligations. One of the ways in which we hope to be able to do that is to work with clients to offset the bureaucratic and administrative burden of status determinations and to provide guidance on how best to manage that exercise.

We’ll be in touch with all our clients and candidates in due course, but please direct any questions you have in the meantime to IR35@contractscotland.co.uk

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