Billy’s Blog



Treasury Confirms IR35 Reforms Will Go Ahead

27 February 2020

Treasury Confirms IR35 Reforms Will Go Ahead

In January 2020, the Government announced a review of the implementation of the April changes to the off-payroll reforms and their extension into the private sector. The Review, commissioned by then Chancellor Sajid Javid, was limited in scope to ensuring the smooth implementation of the rules by addressing concerns from affected businesses and individuals.

This morning, the Treasury published the outcome of the Review, which states that the April reforms will go ahead as scheduled. While acknowledging that there remains “some opposition” to the reforms, the review states that “the government believes it is right to address the fundamental unfairness of the non-compliance with the existing rules.

However, having listened to the concerns of stakeholders, the review also announced that the government is making a number of changes while also continuing their “comprehensive programme of education and support activities.” These changes are detailed below:

  • Customers will not have to pay penalties for errors relating to off-payroll in the first year, except in cases of deliberate non-compliance
  • In response to feedback from the roundtables that an immediate change would be beneficial, the Government has already announced that the rules will only apply to services carried out from 6 April 2020 onwards
  • The Government will place a legal obligation on clients to respond to a request for information about their size from the agency or worker, and update the legislation to address concerns raised over the rules as they apply to offshore companies

The review also summarises the actions taken to date by the government, including clarifying the time frame for the client-led disagreement process and issuing a factsheet to support contractors preparing for the changes. The review states that HMRC will continue to step up their communications in the run up to implementation and will continue to monitor the operation of the rules. HMRC will commission external research into the impact of the reforms six months after implementation, including on how status assessments are being made.

Although the review was seen as something of a forgone conclusion, news that the reforms are to go full steam ahead won’t go down well with an already disheartened contracting sector. It will now fall to the House of Lord’s investigation to offer a more substantial examination of the reforms and their impact. While the Lord’s inquiry is already unearthing compelling evidence that the reforms aren’t viable, it comes down to the question of whether or not the government will listen. Contractors are advised to seek protection from increased blanket policies and to ready themselves for reform.

This content has been supplied by IR35 Guru.

If you’ve been affected by the Off-Payroll reforms, or if you’re unsure about your employment status, 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

Topics: News, IR35