IR35: Government launches review into Off-Payroll Working Rules – but refuses to delay

Financial Secretary to the Treasury Jesse Norman said: “The purpose of this consultation is to make sure that the implementation of these changes in April is as smooth as possible.”

This makes it clear that the government so far has no intention of delaying the implementation date.

The review will consist of a series of round-tables with representatives of those affected by the new rules including contractor groups and medium and large-sized businesses.

There will also be further analysis into the Check Employment Status for Tax (CEST) tool as, even with recent updates made to it in November, it has been much criticised for delivering inaccurate decisions about workers’ employment status for tax purposes.  One of the most common criticisms of the tool is that it does not take into account mutuality of obligations, even though this has been a deciding factor in many recent cases. While the tool may be reasonably reliable in clear-cut cases, it has not proved so in more ambiguous ones.

Finally, the government will also enquire into public sector bodies’ experience of implementing the IR35 changes in 2017.

The review is promised to conclude by mid-February – theoretically giving businesses just enough time to prepare for the April deadline.

Industry response to the review has been poor. Andy Chamberlain, Deputy Director of Policy at the Association of Independent Professionals and the Self-Employed characterised the review as “disappointingly hasty and inadequate” while the Recruitment and Employment Confederation have pushed for a delay to the implementation date to allow more time to make businesses aware of the changes.

As many businesses continue their preparations for April 2020, the one thing that remains clear is that there are likely to be further changes to prepare for.

Background:

On 6 April 2020, medium and large-sized private sector businesses will be responsible for deciding the status of workers who provide their services via an intermediary company. Where, for tax purposes, such individuals are determined to have ‘employment’ status, the organisation, agency, or other third party paying the worker’s company will need to deduct income tax and employee NICs and pay employer NICs.

Sources: https://www.gov.uk/government/news/off-payroll-review-launched and https://www.personneltoday.com/hr/ir35-review-into-off-payroll-working-changes-launched/