The IR35 legislation that is being rolled out to the private sector in April 2020 means that, as opposed to a contractor deciding whether they are classed as ‘inside IR35’ or not, the responsibility shifts to the end engager. This is true in any scenarios where the end engager is classed as being medium or large in size and not ‘small’. It is only in scenarios where the end engager is not classified as ‘small’ that the decision remains with the contractor. If an intermediary or an agent within the supply chain is classed as ‘small’ but the end engager is not, then the new reforms would still apply. This is confirmed in guidance provided by HMRC:
“The conditions about size only apply to clients. If you are a small-sized fee-payer you will still be responsible for applying off-payroll working rules.”
CIPP comment
The CIPP is aware of the implications that the new IR35 reforms will have, both on contractors and their end engagers. As per the advice to proceed with preparing for the new legislation, to help individuals we are offering both a webinar and a half-day training course providing information on the topic. The next webinar is running on 8 January 2020 and the next available course is being held on 13 January 2020 in Bristol.
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Conservative MPS write to Chancellor urging him to extend IR35 reforms deadline 23 December 2019
John Redwood and Andrew Bowie have both written to the Chancellor, Sajid Javid, encouraging him to either delay the implementation of the reforms to IR35 after the current 6 April 2020 deadline, or to completely suspend them until a full review has been conducted. Both are Conservative MPs and feel that a review should be undertaken immediately prior to the implementation of the new rules. John Redwood is the MP for Wokingham and in the letter he submitted, he explained that many of his constituents were worried about the potential effect of the changes to IR35, prior to and during the general election. He explained how the self-employed are crucial to our prosperity and how we should be taking steps to support them. Failure to do this could lead to contractors providing their services elsewhere, potentially abroad, which is a real possibility due to remote working and technological developments. He closed his letter by stating:
“I would be grateful to know the date of the review and if the proposed changes to IR35 will be suspended pending the outcome.”
Andrew Bowie echoed this sentiment and also sent a letter to the Chancellor. He is a Scottish Conservative and Unionist Party politician and the MP for West Aberdeenshire and Kincardine. He wrote:
“If the proposed changes – making every medium and large sector private business responsible for setting the tax status of any contractor they use, were to come into effect, I would worry for the industry and its ability to attract the highly skilled workers they need. It is also predicted that changes could see a workers income reduced by up to 25%. Many of these workers are my constituents.”
He referred to pledges made on BBC Radio 4’s money box in which Javid vowed to review IR35 rules ahead of their introduction to the private sector. Javid stated:
“We’ve already said that we’re on the side of self-employed people. We will be having a review and I think it makes sense to include IR35 in that review.”
The pledge to review the IR35 reforms was, however, notably absent from the Conservative party’s manifesto, launched ahead of the general election.
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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