The past four years have seen a lot of movement over the proposed implementation of the off-payroll rules in the private sector. After a problematic introduction to the public sector in 2017, many opponents of the off-payroll legislation have fought to delay its further implementation with a view to finding a fairer and simpler alternative. This was made even more relevant in the wake of the Covid-crisis as the economic impact begins to take its toll. However, after a long fight, the Report Stage of the Finance Bill yesterday confirmed that the legislation will go ahead in April 2021 with no further delays.
Amendment 20 to delay the introduction of IR35 tax changes until the tax year 2023-24 was proposed by cross-party lead signatories David Davis (Con) and Sir Edward Davey (Lib Dem). Although Labour supported the amendment, the numbers weren’t there, and the vote was lost 317 to 254. The result comes after the Lords report and the Tax Faculty of the ICAEW both proposed that the legislation was fundamentally flawed and should be delayed in favour of finding an alternative – however, it was to no avail.
Opening the debate for the opposition, Pat McFadden (Labour) said that IR35 required an approach that brought together tax and employment law issues. With reference to amendment 35 (not moved), which proposed that IR35 provisions of the bill would not take effect until the Treasury has conducted and published their promised review, he said that he would be asking the government to provide a timetable for its changes to IR35.
He noted that the Chancellor had already hinted at future changes to the treatment of self-employment workers because of the lack of support provided during the Coronavirus pandemic. Amendments 37-54 and 56 (not moved) sought to attach conditions relating to the rights of workers to the IR35 changes. In light of the recent job losses announced across the country and the economic challenge currently facing the United Kingdom, he argued that now was not the time to introduce what has been referred to by some as a ‘tax bomb’.
Alison Thewliss (SNP) went further, saying that the SNP's New Amendment 16 would scrap IR35. She called on the government to take the advice of the Lords to pause the policy and ‘go back to the drawing board’. Speaking about many of her constituents who have been impacted by the policy, she described the CEST tool as the government’s attempt to take the requirement for ‘a complex legal specialty in employment law and replace it with an online quiz’.
Responding for the government, Jesse Norman said that he had been ‘pressed vigorously’ by colleagues on the IR35 matter. He stated that it would be a ‘serious mistake’ to remove IR35 reforms (as proposed by Amendments 16 and 17) from the Bill that would cost the country ‘many hundreds of millions of pounds’. Mr Norman claimed that non-compliance with the rules was expected to cost the Treasury £1.3 billion alone in 2023/24.
Speaking about the result of the vote on Linked-In, off-payroll campaigner Dave Chaplin thanked the 4,000 lobbyists who managed to get the vote to parliament, while also sadly acknowledging the fight was over. Although there’s a Third Reading of the Bill before it passes to the Lords, Chaplin observed that – ‘it's all ceremonial from here on in’.
This content was supplied by IR35 Guru
Contractors and businesses are now advised to use the remaining time until April 2021 to prepare for the changes ahead. If you’re looking for more information on IR35 our free comprehensive guide gives you a clear overview of the legislation to date. Umbrella Exchange has a range of options to help you keep your contracting career on track. To talk to a member of our team, call: 0203 393 3881
