With Boris Johnson in the hot seat, his appointment of Sajid Javid to Chancellor of the Exchequer could have significant implications for the contracting sector. Although a Brexit solution looks likely to dominate the PM’s attention, what’s best for the UK economy is an important factor in any negotiations. With Javid, who’s worked in the emerging markets business, contractors could have a potential ally who will understand how important contractors are to competitive business growth and sustainability.
Nine years ago Javid penned an article for Conservative Home stating: “We should repeal the silly IR35 tax on providers of personal services.” It remains to be seen if Mr Javid’s opinion has changed now that he’s Chancellor. If he does hold the same views, he’ll be in good company, as more than 200 of his colleagues signed a letter to the treasury calling for a suspension of IR35 reforms and a review of the controversial Loan Charge that came into force in 2019.
In fact many lobbyist supporters have won Cabinet access, including Esther McVey (Housing Minister), Grant Shapps (Transport Minister), Dominic Raab (Foreign and Commonwealth Affairs Secretary), Jo Johnson (Business Secretary) and Priti Patel (Secretary of State for the Home Department). All five parliamentarians have raised issues about HMRC’s treatment of taxpayers affected by the Loan Charge.
Recently it was announced that HMRC are to have a new Professional Standards Committee that will take advice from a number of independent experts. One of the issues the committee will consider relates to the implementation of HMRC powers. Although the committee isn’t wholly independent, it will go some way towards HMRC monitoring. There have been numerous instances where contracting bodies have questioned the methods of tax inspectors, for example with regards to them turning a blind eye to blanket IR35 assessments in the public sector, without any means of holding them to account.
By addressing the unfairness and administrative burdens that the off payroll proposals will bring to the supply chains, the government has the chance to strengthen the economy and the flexible labour market. Many people believe this is the worst time to introduce payroll reforms to the private sector. In the lead up to Brexit, it’s critical that the UK remains an attractive prospect for businesses. If organisations choose to do business elsewhere because of a lack of access to the kind of talent they require, it might not be so easy to regain their interest in the future.
If the planned reforms go ahead in the private sector contractors should ensure they’re ready. For contractors who are likely to work on contracts both inside and outside IR35 a flexible payroll solution will provide you with options so that you can still maximise your earnings on contracts that fall outside IR35, with the security of an umbrella provider for those contracts that are deemed inside.
Umbrella Exchange offer a range of flexible options when it comes to contractor support services. To speak to a member of the team call: 0203 393 3881