Agreement has been reached by MPs at the Committee stage of the Finance Bill amendment today (18/06/20), resulting in the rollout of IR35 in April 2021.
This now means that on the 06/04/21, medium and large businesses will become responsible for administering the IR35 status of any contractors they use.
Seb Maley, CEO of Qdos, who offers insurance and tax advice for the self-employed said:
It’s hugely disappointing, albeit unsurprising, that MPs have given the 2021 rollout the green light. For years the Government has mistakenly been under the impression that contractors abuse the IR35 rules. In our experience, this simply isn’t the case.
If mismanaged, these changes pose a real threat to contractors, the recruiters who place them and the businesses that engage them. It’s therefore vital that companies impacted by IR35 reform continue their preparations and ensure they are in a position to make accurate IR35 decisions well in advance of the implementation date.
Firms yet to consider IR35 need to immediately, while companies that banned contractors in anticipation of the reform need to understand that it can be managed with the right approach.
In May, David Davis, the Conservative MP for Haltemprice and Howden and other backbench MPs tabled an amendment that the legislation should be delayed until 2023-24 in the House of Commons on the 19/05/20. However, it did not receive enough support 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, he then backtracked on this and said the party would review IR35.
The House of Lords released the report ‘Off-payroll working: treating people fairly’ which “exposed the many flaws” of the legislation”. Still, 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. Which has now come to fruition.