The first 12 months of IR35 will not be 'heavy handed'

Rishi Sunak, Chancellor of the Exchequer has said that the first 12 months of the enforcement of IR35 will not be “heavy handed” which has received criticism from contractors as they believe the legislation should just be delayed.

Mr Sunak said:

I’ve spent time with HMRC to ensure they are not going to be at all heavy handed for the first year to give people time to adjust as well, which I think is an appropriate and fair thing to do.

James Poyser, contractor accountant said:

There’s no point in a soft landing. If they’re worried about implementation, then delay.

Mr Sunak has promised the review in to IR35 will lead to “tweaks and improvements” to the legislation’s framework.

The review of IR35 is expected to be published before his first Budget as Chancellor on the 11/03/20.

Dave Chaplin CEO of ContractorCalculator and IR35 Shield said:

Rishi Sunak, who after being crowned Chancellor has already made his first gaff, by effectively announcing that the results of a promised IR35 Review is going to result in no changes at all, despite mounting evidence of the damage it is already causing businesses across the UK.

We are seeing firms halt or delay their projects, or moving them offshore, putting the self-employed out of work. And all Rishi Sunak can offer is that he’s had a cosy chat and ask HMRC not to be too hard on firms in the first year.

That is a pitiful response from the Chancellor, and clearly demonstrates he is incapable of exercising any power, reaffirming rumours that he is Mr CINO (Chancellor In Name Only).

The Conservatives, supposed party of small business, are killing the UK entrepreneurial drive, just as we prepare to leave the EU.

However, some feel this is a good sign that the Chancellor is making such comments as the Association of Professional Staffing Companies (APSCo) welcome Mr Sunak’s comments.

Samantha Hurley, operations director at APSCo and co-chair of the Government’s IR35 Forum, said:

While not written into the legislation, HMRC has been clear from the beginning that it wasn’t on a witch hunt and wouldn’t deliberately go after workers that move into PAYE solutions that historically were self-employed – I think they have been open about genuinely wanting people to comply with the new rules. With this in mind, the Chancellor’s latest comments sound like he is aligned with this thinking.

We are, however, encouraged by the Chancellor’s suggestion that we can expect some ‘tweaks and improvements’ to the implementation of the policy when the results of the current review are published. A ‘soft landing’ sounds good, if this is a nod towards a period of three to six months in which companies will have time to adjust to the new rules and not be penalised. We still don’t have final legislation, but it’s due to go live on 6th April, so a period of time within which recruitment businesses and end clients wouldn’t be penalised would be welcomed by our members.