Unpopular legislation faces pushback from business leaders.
An analysis of responses to the government’s consultation on the forthcoming IR35 reforms in the private sector claims that HMRC is facing increasing calls to put the plans on hold for at least 12 months.
The analysis, carried out by ContractCalculator, reports that business leaders are pushing for a delay to further review and revise the proposed changes which are set to come into force in April 2020. The unpopular legislation, which aims to reduce tax avoidance for contractors who should be properly classed as employees, has been subject to intense criticism since its launch in the public sector in April 2017. Now, key industry bodies, including the Confederation of British Industry (CBI), and the Association of Independent Professionals and the Self Employed (IPSE) have made it clear that they do not feel the time is right to roll out IR35 to the private sector.
Key concerns were raised around the suitability of the government’s CEST portal, ongoing non-compliance in the public sector, and the lack of time that the private sector has had to properly prepare for the sweeping reforms. The liability model has also been called out as being ‘grossly unfair on non-compliant parties.’
The CEO of ContractCalculator, Dave Chaplin, concludes:
“This summary makes it clear that HMRC has a lot of work to do before it can seriously consider extending the Off-Payroll rules to the private sector. Many have urged HMRC to take stock, instead of ploughing ahead with its ill-conceived plans. At the very least, a further postponement until April 2021 is needed to enable HMRC to attempt to fix the many flaws in its plans.”
It is unclear as we move forward whether the HMRC will heed these concerns and take steps to reduce the anxiety that is being felt throughout the private sector. But whether the reforms hit as expected in April 2020 or at a later date, it is vital that businesses begin to prepare for the changes today. IR35 is coming, whether we like it or not.