The Association of Independent Professionals and the Self-Employed (IPSE) is hoping that newly appointed chancellor of the exchequer, Sajid Javid will scrap IR35 as they feel it “is a massive bureaucratic drag” and will cause sizeable damages.
Mr Javid back in 2009 writing for ConservativeHome, a centre-right political blog, said:
We should repeal the silly IR35 tax on providers of personal services.
IPSE believes extending the public sector IR35 changes to the private sector will be deeply damaging. Not only to contractors, but to the large companies which engage them and the economy as a whole.
Chris Bryce, IPSE’s CEO, said:
Sajid Javid is a strong appointment as Chancellor and we very much look forward to working with him. We know Mr Javid understands the needs of freelancers, saying only a few weeks ago that ‘bureaucracy and paperwork are stifling the growth of our small businesses’. We wholeheartedly agree.
He faces some tough challenges but an easy early win would be to boost the innovative microbusinesses that make Britain globally competitive. This means scrapping the massive bureaucratic drag and damage of IR35 and the retrospective loan charge, simplifying the tax system and supporting freelancers with a fair system of parental leave.
Mr Javid made these comments in response to the report Think Small-A blueprint for supporting UK small businesses which was released on 16th May 2019.
The report was written by Nick King, head of business at think tank, Centre for Policy Studies. The report calls for the Government to adopt a policy to champion small and family businesses.
IPSE feel that if IR35 comes in to affect it will:
- Heap significant cost onto businesses
- Restrict the private sector’s access to the specialist skills it needs
- Reduce flexibility in the supply of those specialist skills
- Further complicate employment status
- Give rise to legal challenges, particularly with regard to employment rights and status appeals
- Swamp UK businesses in red tape
- Damage UK productivity
- Result in multi-national businesses shifting projects off-shore
- Encourage further use of non-compliant umbrella arrangements and tax evasion schemes
IR35 is set to apply to the private sector as well as the public sector in April 2020. This will mean private sector companies will have to check if their contractors need to pay income tax and national insurance. This will place the responsibility of categorising contractors on the company.