House of Lords writes to Treasury with list of IR35 concerns

The House of Lords has written to the Treasury, with a list of concerns it has regarding the roll-out of IR35, which it hopes the Government will address before the roll-out of IR35 in 2021.

The letter was written by Lord Forsyth of Drumlean and sent to Jesse Norman, financial secretary to the Treasury. Lord Forsyth chairs the Finance Bill Sub-Committee which was announced on 04/2/20 and has a specific focus on the extension of off-payroll working rules.

In Lord Forsyth’s letter he outlines the cost of implementing the off-payroll reform and asks the Treasury to respond to questions regarding the success of public sector changes, blanket assessments, the impact on umbrella companies, HMRC’s IR35 tool Check employment status for tax (CEST) and the fairness of the reform.

The House of Lords asked the Government to defer IR35 due to the outbreak of COVID-19, which it then did for a year to 2021. 

Seb Maley, CEO of Qdos, who offers insurance and tax advice for the self-employed said:

This letter shows how many holes there are in the Government’s plan for IR35 reform currently. Whether it’s the supposed success of public sector changes or HMRC’s blind belief in its own IR35 tool, CEST, Lord Forsyth has asked a number of important questions that the Government must provide clear and honest answers to.

The letter shows, above all else, that the Government has a lot of work to do before the eventual rollout of the reform. Regardless of the fact that it has now been delayed by one year, there are a number of aspects to the incoming changes that don’t stack up.

Following the announcement that IR35 would be deferred for a year, law firm Baker McKenzie put together a client alert on the next steps for businesses. The four points made were:

  • Determinations already made
  • Challenges already received
  • Unwind changes in structure?
  • Move forward or press pause?