A joint letter from the Recruitment and Employment Confederation (REC) and 14 UK recruiters has been sent to Sajid Javid stating that the limited review of IR35 currently in process will not achieve much change and to delay the implementation until 2021.
The letter sent to Sajid Javid, Chancellor of the Exchequer comes from the REC, REED, Manpower, Hays and others.
The letter states:
Making any necessary changes in 2021 would give space for a more detailed review and also grant government sufficient time to implement any suggestions from it – including effective enforcement. The current timetable leaves only 17 working days between the publication of final legislation on March 11 and implementation on 6 April.
It also outlines how companies are now putting an end to certain projects due to IR35 and work being taken offshore. As well as this letter being sent to the chancellor today (21/1/20), IBM, a multinational information technology firm has announced a ban of the hiring of contractors due to IR35. IBM joins a growing list who have reacted in the same way to the legislation such as the “big four” UK banks, HSBC, RBS, Lloyds and Barclays.
Dave Chaplin, CEO of contracting authority ContractorCalculator and IR35 Shield said:
HMRC has always claimed that the Off-Payroll Reforms will not affect the genuinely self-employed. This is now evidently not true. The market is being heavily distorted, and damaging for firms, because contract rates will inevitable rise. And firms are now effectively saying “I cannot work here”, and are moving their projects off-shore. HMRC has created a political crisis for the Conservatives, who purport to be the party of business. How does killing UK jobs and encouraging firms to move work offshore raise tax?
The letter makes two suggestions to the roll out of IR35:
- Create an independent chair and body to lead the review.
- Assess what impact IR35 had on the public sector when it was introduced in 2017.
Neil Carberry, chief executive of the REC, said:
It’s absolutely right that everyone pays the right amount of tax, and by working with recruiters and other businesses closely, the government could ensure that this legislation works exactly as intended.
But the extension of IR35 into the private sector, as it currently stands, will punish ethical businesses, harm workers and provide the environment for non-compliance to thrive. It’s always good to see further opportunities for engagement opening up, so we welcomed the review. But without a delay to implementation real change is impossible. We need to get the rules right, deliver on regulation for umbrella companies and have proper enforcement in place before pressing go. That’s why leaders of the UK’s top recruitment firms supported today’s REC letter to the Chancellor, asking that he looks again at the timing and structure of the IR35 review.
Delaying will allow MPs to properly take stock of the impact the legislation will have.