MPs amendment defeated with IR35 set to be rolled out in 2021

The Government appears to be going ahead with the roll-out of IR35 to the private sector in 2021, despite backbench MPs tabling an amendment that the legislation should be delayed until 2023-24 in the House of Commons on the 19/05/20.

David Davis, the Conservative MP for Haltemprice and Howden and other backbench MPs tried to defer IR35 but to no avail, as the Labour party declined to vote on the amendment. In the run-up to the 2019 General Election, Bill Esterson, Labour’s shadow minister for international trade on the 25/11/19 said the party would put a stop to IR35 being introduced to the private sector, however, he then backtracked on this and said the party would review IR35.

As MPs failed to vote on the amendment, the legislation is another step closer to being introduced in April 2021.

Dave Chaplin, director of The Stop The Off-Payroll Tax Campaign, said:

Despite the best efforts by Tory MP David Davis to introduce an amendment at this stage of the Finance Bill process, delaying the Off-Payroll legislation for a further two years, the Bill will now proceed to Committee Stage.

It signals an entrenched and tin-eared approach by a government that is failing to listen to the people, failing to heed the damning findings expressed by the Lords in its recent report, and failing to listen to the legitimate concerns of the senior members of its own Party.   To bulldoze ahead with this damaging legislation at a time of national crisis beggars belief.  The Government should be supporting businesses right now, not hampering them and, in turn, inflicting harm on the entire UK economy.

Pressure is now building as we head to the Committee and Report Stages of the Finance Bill and we will be continuing to campaign on behalf of the UK’s contractors and freelancers to prevent the legislation entering statute in its current form.

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

It’s a big disappointment that IR35 reform will not be delayed, but then again it’s of no real surprise that the changes will go ahead next year. The Government has buried its head in the sand when it comes to IR35, continually ignoring compelling arguments that call for a rethink of the legislation. The Coronavirus crisis also means raising tax receipts has become a priority for the Treasury – even if that means contractors may be wrongly forced into ‘zero-rights employment’ as a result of the reforms.

With less than a year until IR35 reform arrives in the private sector, businesses must continue their preparations. And companies that haven’t started yet must get to work. The changes are needless and short-sighted, but by taking a measured approach and prioritising accurate assessments, firms can continue to compliantly engage genuine contractors outside IR35. Meanwhile, the businesses that have banned contractors altogether or blanket-placed these workers inside the legislation should reconsider their stance immediately.

When the House of Lords released the report ‘Off-payroll working: treating people fairly’ which “exposed the many flaws” of the legislation” the Government made it clear it still intends to roll-out IR35 in 2021. On the same day the report was released (27/04/2020), Jesse Norman, the financial secretary to the treasury indicated 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.