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HMRC reforms

Campaigners welcome review of IR35 contractor rules

Mike Cherry

Mike Cherry: ‘important review’

A promised review of a controversial off-payroll tax scheme has been confirmed, giving contractors fresh hope that changes will be introduced.

However, questions have been asked about the ability of the review team to complete its task before the planned change is due to come into force in April.

The review of IR35 follows concerns raised by campaigners and MPs that contractors would be assessed to determine whether they should be taxed as full-time employees.

The proposed reforms aim to bring the private sector into line with the public sector where the changes were implemented in 2017. 

However, the Federation of Small Businesses has warned that big corporations will pull the plug on contractors if the changes to IR35 by HMRC go ahead in April as planned.

In a statement published today, the government announced it had launched a review of the changes to IR35 “to address any concerns from businesses and affected individuals about how they will be implemented.”

It continued: “As part of this, the review will also assess whether any additional support is needed to ensure that the self-employed, who are not in the scope of the rules, are not impacted.”

Nick Woodward, CEO and founder of ETZ Payments, said: “The review is good news for those who are concerned by the new IR35 rules but it will present uncertainty for workers, recruitment agencies and companies who have already adapted to the changes.

“Considering that MPs in the Government were openly calling for this review, the fact it has happened so quickly in the new year shows the HMRC’s commitment to this and hopefully, the review and its recommendations will give all players enough time to adjust ahead of April.

“The Government need to ensure that people have all the relevant, correct information at their disposal to ensure they can be IR35 compliant before we reach April, and hopefully, this review will provide swift clarity to all.” 

FSB national chairman Mike Cherry welcomed the review and warned of the damage that could be done if there are no changes.

We’ve already heard big corporations say they’ll pull the plug on contractors if planned changes to IR35 go ahead in April.

– Mike Cherry, FSB

“This important review presents an opportunity to reassess our flawed off-payroll legislation,” he said.

“We’ve already heard big corporations say they’ll pull the plug on contractors if planned changes to IR35 go ahead in April.

“We have to remember that we’re in a global competition for talent. We need to make the UK a better, not more restrictive, place to do business.

“At a time when skilled, flexible contractors are needed more than ever by employers, the switch in where responsibility lies for IR35 assessments will cause firms to shut out contractors. 

“The official announcement of a manifesto commitment to review support for the self-employed is very welcome. We look forward to working with the Treasury to ensure that sole traders have access to the finance, connectivity and protections they need to thrive.” 

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