Government immediately rejects Lords IR35 report 'which exposes flaws'

The Government still intends to roll-out IR35 in 2021 despite the House of Lords releasing a report which “exposed the many flaws” of the legislation.

Jesse Norman, the financial secretary to the treasury indicated on the 27/04/20 in the House of Commons that the Government is still planning to introduce IR35 in to the Finance Bill 2020- 2021. Still, the amendment will need to be voted on and currently cannot due to the lockdown.

Before, but on the same day as Mr Norman speaking in the House of Commons, the House of Lords released the report ‘Off-payroll working: treating people fairly’ which urges the Government to look in to the IR35 flaws, and that a decision should be made in six months whether or not to enforce the delayed reforms in the private sector in 2021.

The report is 67 pages long and comes from the Economic Affairs Finance Bill Sub-Committee which was announced on the 04/2/20, and has a specific focus on the extension of off-payroll working rules.

Dave Chaplin, director of The Stop The Off-Payroll Tax Campaign and CEO of contracting authority ContractorCalculator said:

Despite the Lords’ damning report on Off-Payroll out earlier today the Government is still planning on forging ahead with its plans and has shut its ears to the legitimate concerns of Lord Forsyth and his colleagues.  The Off-Payroll Tax is already decimating the flexible workforce, resulting in a mass exodus of contractors from companies, leaving projects in disarray, with work being shifted off-shore. This new “zero rights employment” model is fundamentally flawed, and frankly an embarrassment for the Conservatives and Boris Johnson, who purport to be the party of small business.  Covid-19, Brexit and Off-Payroll tax will wreak havoc on the UK economy.  We need to unleash businesses and let them grow, not strait-jacket them.

Lord Forsyth of Drumlean, chair of the Lords, Economic Affairs Finance Bill Sub-Committee spoke of the witnesses that the committee saw and their description of this “sickly” piece of legislation.

Justine Riccomini from the Institute of Chartered Accountants of Scotland (ICAS) said:

IR35 was conceived 20 years ago. It was a sickly child when it was conceived, and I do not think it has got any better along the way.

Lord Forsyth said:

It’s right that everyone should pay their fair share of tax. But as we set out in our report , Off-payroll working: treating people fairly, the IR35 rules—the Government’s framework to tackle tax avoidance by those in ‘disguised employment’—have never worked satisfactorily, throughout the whole of their 20-year history.