Despite the new IR35 rules being implemented just a week ago, MPs have released a report which urges key reforms to be made to the off-payroll working rules.

Commenting on the new IR35 reform, the Loan Charge All-Party Parliamentary Group (APPG) have listed several recommendations which will “stop the promotion of disguised remuneration schemes” and “properly [recognise] contracting and freelancing in legislation”.

One such reform is the call for IR35 to be amended during the passage of this year’s Finance Bill. The report argues that tax law and employment law should be “aligned” in order to ensure workers who are taxed as employees also receive the corresponding recognition and benefits.

As such, the report calls for all workers who are “inside IR35” to receive full rights under all legislation dealing with agency workers, with a clear and transparent right to holiday and sick pay.

Furthermore, the APPG have also called on the Government to introduce statutory regulation for payment intermediaries. This, the group have claimed, would strengthen and clarify existing regulation which makes it unlawful for an employment business to offer a position that is conditional on using a specified umbrella company or payment intermediary.

According to the report, IR35 – first introduced in 2000 – was created with the intention of stamping out what has become known as false self employment, where people who clearly were – or should have been – employed, were claiming to be self-employed simply for tax purposes.

However, the APPG have expressed that, due to the way HMRC have sought to enforce the legislation, genuine contractors and freelancers have been at risk of being unfairly targeted.

The Government have since responded to these recommendations, with a spokesperson speaking to The Yorkshire Post:

Protecting and enhancing workers’ rights through robust regulation – including for those employed by umbrella companies – is a top priority for this Government.

We have already introduced requirements to improve the information provided to new agency workers about their contractual terms and pay rates, and have committed to establishing a single enforcement body to further protect vulnerable workers.


The full findings of the report can be found here.