Pressure building on new Chancellor to suspend IR35

The Recruitment and Employment Confederation (REC) and the Association of Independent Professionals and the Self-Employed (IPSE) are urging the new Chancellor, Rishi Sunak, to suspend the IR35 tax legislation.

These calls come as there is speculation that the budget may be pushed back from its intended date of 11/03/20, in order to give Mr Sunak more time, as he only obtained his new position on the 13/02/20.

Andy Chamberlain, deputy director of policy at IPSE explained that the roll-out of IR35 would have “disastrous consequences for the wider economy.”

Both bodies feel that Mr Sunak should work and engage with businesses and find out the best possible way to implement the changes.

Due to the uncertainty surrounding IR35, companies have reacted by imposing a blanket rule of not hiring contractors.

Neil Carberry, REC’s chief executive said:

Lots and lots of companies, because they are unsure about how to abide these new IR35 rules, are sitting back and saying: ‘We are not taking contractors on’.

In October 2019, all “big four banks” Royal Bank of Scotland (RBS), HSBC, Lloyds and Barclays placed a ban on the use of contractors in preparation for IR35.

Ed Molyneux, CEO and co-founder of cloud accounting software company FreeAgent, said:

The REC and IPSE are the latest employment groups to have urged the new Chancellor Rishi Sunak to suspend the new IR35 private sector reforms for self-employed workers. It’s no surprise the build up of uncertainty in the freelancer and contractor community is coming to a head ahead of the roll out of new regulations in April – there is little time left for these concerns to be heard and dealt with. Expanding IR35 legislation into the private sector will have a dramatically negative effect on UK freelancers and contractors, essentially pushing them into quasi-employment but without any of the protections that they would receive if they were actual employees.

This is a delicate situation that will impact a great number of people across the country, so nonchalant decisions made without clear communication to those most affected is simply not acceptable.

All of this is happening as a government review in to IR35 is taking place. The review was announced on the 7/01/20 and according to the Government “will determine if any further steps can be taken to ensure the smooth and successful implementation of the reforms, which are due to come in to force in April 2020.”