IR35 reforms delayed a year

March 19, 2020

In light of the Coronavirus pandemic which is currently consuming the media, government and the country’s health services resources, Chief Treasury Secretary Steve Barclay has announced that IR35 reforms will be put back a year to 6 April 2021.

The delay is part of a package designed to support small businesses during the crisis.

The controversial reforms had been announced in the recent budget.

A pretty broad consensus amongst clients and small businesses in our region is that the delay is a good thing, but it doesn’t go far enough. Many feel the reforms are punitive and damaging to small business and they should be scrapped altogether. No sign of that. Yet.

Barclay said it was “a deferral, not a cancellation, and the government remains committed to reintroducing this policy”.

The reforms had been designed to address tax avoidance by targeting contractors and freelancers engaged by companies who, in effect, provide the same service as employees. It’s a contentious issue that has long divided businesspeople due to the ambiguities and variables that exist in contractor-business relationships. Things are rarely clear-cut.

There is little doubt that the reforms will hurt small businesses. They already have because many have invested resources in researching what’s required and implementing changes to comply. Many contractors have reportedly already had contracts terminated.

A delay to these reforms is good news – particularly in the current climate. However, it doesn’t go far enough. Hopefully this effective ‘buying of time’ will work to the advantage of those against the reforms. James Poyser, CEO of inniAccounts, said: “This will give time for the Lords review to be published … we hope that the Treasury and HMRC listen to their recommendations before attempting to re-table this legislation.”

We hope they do.

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