Businesses told to continue IR35 preparations as political parties pledge review – People Management Magazine

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The Conservatives have pledged to review IR35 tax reforms due to be rolled out to the private sector if they remain in power, bringing their policy into line with those of the other major parties contesting the general election.

The news means the introduction of private sector IR35 next April is almost certain to be delayed and may be significantly amended. But while that has been welcomed by some business groups, legal experts said businesses would be “foolish” to halt preparations for a 2020 rollout.

Speaking on Radio 4’s Money Box show, chancellor Sajid Javid (pictured) said his party would look again at the rules to “make sure that the proposed changes are right to take forward”.



Labour’s shadow small business secretary, Bill Esterson, has previously said Labour would review the current plan to roll out IR35 changes to the private sector, while the Liberal Democrats have explicitly pledged a review in their manifesto of a reform, which will have a huge impact on HR and finance departments.

But Matt Fryer, group compliance director at Brookson Legal, said: “Businesses would be foolish to halt their preparations now and a contractor workforce audit is still incredibly valuable.” He argued that a review was unlikely to result in the policy being abandoned given the £1.3bn of additional tax revenue the Treasury believes the change would generate.

“The latest announcements from Labour and the Conservatives only add to the uncertainty for contractors and businesses, many of whom have already invested considerably in preparation for April 2020,” Fryer said, adding: “Clear communication is a priority for those who are likely to be most affected.”


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Under IR35, employers must decide whether contractors should have tax and national insurance deducted through PAYE if their relationship with the business could be deemed to resemble that of an employee. 

HMRC said the changes were designed to ensure individuals effectively performing the same role were taxed identically. Public sector employers have been required to determine tax classification under IR35 since 2017.

The way the change was rolled out in the public sector garnered criticism from both businesses and contractors, meaning the potential delay in the private sector has been broadly welcomed.

Andy Chamberlain, deputy director of policy at the Association of Independent Professionals and the Self-Employed, described the review as “a step in the right direction” and called for politicians to commit to halting the 2020 rollout all together.

Matthew Sharp, senior associate at Fieldfisher, described the review as “welcome news”, but remained cautious about the outcome. Sharp said it seemed “inconceivable” that meaningful change would follow the review and added: “Further, a delay to implementation seems unlikely given that the equivalent rules are already in place in the public sector (and being enforced by HMRC) and that private sector implementation has already been delayed once.”

Despite promises to review the reforms, Sharp said businesses would be “well advised to continue to plan for implementation in April 2020”. 

Susan Ball, employment tax partner at consultants RSM UK, said it was difficult to see what impact a review would have without any detail as to what it would involve. “The government we currently have, which Sajid Javid is part of, introduced it [the IR35 change] to the public sector and proposed this for the private sector… So I’m not quite sure what a review realistically means.” 

Ball advised all businesses to work on the basis that the change would still take place as planned, but said a delay to the rollout was conceivable given that the forthcoming election had delayed HMRC’s education programme ahead of the rollout. 

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