Business groups welcomed the Conservative party pledge, made just before the election, to review the upcoming IR35 changes. But will Boris Johnson keep his promise?
Business leaders have wasted no time since the general election in lobbying the Conservative party on the issue of the controversial IR35 tax reforms that will affect contractors in the private sector from April 2020.
Not long before election day, chancellor of the exchequer Sajid Javid promised to review IR35. Chris Bryce, ceo of the Association of Independent Professionals and the Self-Employed (IPSE), said: "We campaigned hard against the disastrous changes to IR35 and we will be holding chancellor Sajid Javid to his promise to review them. To truly support the self-employed, this government must also halt the changes, which are due in April, while a full review is carried out. Time is short: the new Conservative government must act now to protect this vital sector."
Dave Chaplin, ceo and founder of ContractorCalculator and director of the Stop The Off-Payroll Tax campaign, said: "In the run-up to this election we heard a number of political parties pledge to review IR35 and, as Boris Johnson re-enters Number 10, I would like to remind him of that promise.
"The off-payroll rules in their current proposed format create an unfairly burdensome scenario which has the potential to poison the entire engagement process between contractor, client and agency. It will force thousands of contractors into false employment, expose self-employed contractors to excessive taxation as well as depriving UK plc of essential access to talent and key skills and drive up project costs.
"I would urge the prime minister to now confirm that he will conduct a proper review, put the off-payroll roll-out on hold and work with the contracting community and stakeholders on devising how best to recognise contracting and freelancing in the tax system."
Julia Kermode, chief executive of The Freelancer and Contractor Services Association (FCSA), said: "I would like to remind [Boris Johnson] and his government that they have promised to review the planned off-payroll reforms. We must now hold him to account and press him to conduct that review and with only just over three months to go before the legislation is due to be rolled-out in the private sector, surely that must mean a postponement? … If they don't delay then the promise was nothing short of an arrogant and disingenuous move to secure votes."
With the next budget planned for February or March, Kermode added that it is "simply too late" for the off-payroll legislation to be properly implemented. "Many businesses have already invested heavily in preparing for the changes, and given the legal requirement for reasonable care it is unrealistic to press pause for a potentially meaningless review to take place," she said. "If the government wants to avoid utter chaos and shambles, businesses need clarity now."
The calls come as new research finds that half of businesses are still not ready for IR35. Just 51% of the professional recruitment firms polled by the Association of Professional Staffing Companies (APSCo) said that the majority of their clients are actively preparing for the new legislation.
Tania Bowers, general counsel at APSCo, said: "The countdown to the off-payroll working reform is now well and truly underway - but our latest data suggests that many employers are either unaware of the wider potential consequences of the changes, or simply burying their heads in the sand. Irrespective of any review into the roll-out, which may be announced in the Queen's Speech, clients should not be complacent given the scale of this challenge."
Written by Rachel Miller.