IR35 update

10th July 2019

 

Tuesday the 9th of July saw Contractors like you gather at Westminster as part of an organised lobby, headed up by our partner Contractor Calculator, that sought to bring attention to the suspected damage of introducing IR35, and the ‘off payroll tax’ rules, to the private sector. A move by HMRC that is set to come into force in April 2020. 

 

The Lobby started outside parliament before moving to the Treasury in order to deliver a letter to Chancellor Philip Hammond that urged a rethink of the intended plans to introduce off payroll tax rules to the private sector. Following this, campaigners had an opportunity to meet their MPs and talk to them directly about the negative reality of this legislation on their work, the wider contracting industry and the UK economy. You can watch this short film by Recruiter Magazine to learn why campaigners and Contractors chose to be there.

 

Ultimately, the campaign Contractor Calculator is running has two primary objectives, one is to stop the introduction of the off payroll rules to the private sector. The second is a call for the Government to instead launch a ‘much-needed review into the deeply flawed IR35 legislation and to come up with the right way to recognise contracting in the tax system.

 

Examples of these flaws that Contractor Calculator communicate are evidenced to many in the number of cases that have been brought to court against HMRC by individuals challenging IR35 induced tax bills. Only this week HMRC suffered another high profile IR35 tribunal defeat, adding weight to the suggested inadequacy of the tax legislation. 

 

This inadequacy has already been felt by the public sector who have been subject to IR35 legislation since April 2017. It’s been suggested that since this happened many organisations have applied a blanket approach to Contractors, rather than assessing each Contractor individually. They have instead chosen to treat all of their Contractors as salaried employees and inside of IR35 to avoid the risk of hefty fines. This has made Contractors liable for paying the same tax contributions as full-time employees, compromising a large chunk of their pay, while not benefiting from employee perks like sick pay and holiday pay. Just one of the reasons we recommend Private Healthcare and Income Protection to our clients.

 

With the fears that the same will be said for private sector organisations looking to work with Contractors, there is a lot to be done in the interim between now and April 2020. Beyond ensuring you are up to date on the latest information on this, you might be interested in campaigning too – you can do this here. Otherwise, we recommend keeping on top of the latest insights via outlets like Contractor Calculator, IT Contracting and Contractor Weekly.

 

UPDATE:

 

The government released a policy paper detailing the rules for off-payroll working from April 2020 on Thursday the 11th. The paper outlines that,

to increase compliance with the existing off-payroll working rules in the private and third sectors, medium and large engagers will become responsible for assessing an individual’s employment status and deducting the right tax and National Insurance contributions when appropriate.

 

You can read the paper here and the responses of the Contractor community following its release here.

 

All content is accurate at the time of publication

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