Chancellor confirms that IR35 reforms will proceed on 6 April 2020

Budget 2020: Chancellor of the Exchequer Rishi Sunak announced on 11 March 2020 that changes of the off-payroll working rules, known as IR35, will go ahead on 6 April 2020.

The off-payroll working rules, introduced in 2000, are used to ensure that an individual working like an employee, but through a third party organisation, pays similar taxes to other employees. The latest reforms are intended to make medium and large organisations responsible for determining the tax status of contractors.

The government recently concluded a review of the upcoming reforms, with a view to making changes to support their smooth and successful implementation.

In the Budget 2020, the government stated that it is right to address the fundamental unfairness of the non-compliance with the existing rules, and that the IR35 reforms will be implemented on 6 April 2020, despite the concerns voiced by numerous stakeholders.

Charlotte Gregson, managing director UK and Ireland at Comatch said: “At a time when the need for a flexible workforce has never been more acute, the government has missed an opportunity to repeal its changes to the IR35 legislation. It only serves to underline that the role of independent professionals is either misunderstood or under-appreciated and is going to result in many hardworking individuals being penalised for taking the decision to set up as independent consultants and open themselves up the risks and challenges being self-employed brings.”

Dominic Harvey, director at CW Jobs, added: “Yesterday, the Chancellor confirmed that private sector firms will soon have to judge whether their contractors fall under IR35 or not. As of four weeks’ time this new regulation echoes the announcement directed at public sector companies in August 2017.

“With the tech industry largely reliant on contractors, IR35’s extension to private sector [organisations] means that those not aware of this new law will be caught out; something that may further extend the current skills gap.

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“It is vital both businesses and trade institutions across the industry help educate one another around the IR35 ruling and do all they can to understand the legislation. This is particularly the case as many contractors likely to be impacted by IR35 frequently opt to work remotely.

“Additionally, businesses need to work closely with their contractors to ensure operations continue as normal from April onwards. As we saw with the introduction of [General Data Protection Regulations (GDPR)], whilst tech firms are given notice over these rulings they must now ensure they are up to speed to guarantee a smooth transition through the Treasury’s ‘light touch approach.’”