IR35: Government needs to work with recruitment industry to make improvements

In the recent Budget, the Chancellor announced that there will be no further action with regards to IR35 at the moment, however, there are still talks of making changes eventually.

There were concerns that the private sector would face the same fate as the public sector, and although this may still happen, the government will conduct an impact assessment of off-payroll rules in the public sector before he considers extending them.

This news has been very much welcome by the self-employed community, including the Association of Independent Professionals and the Self-Employed (IPSE).

Commenting on the Budget outcome, Chris Bryce, IPSE’s CEO, said, “IPSE were pleased to see that the Chancellor has understood our message that businesses of all sizes – including the vital self-employed community – need support. Tax is already a nightmare for many self-employed people, and lowering the VAT threshold would have added reams of red tape to the mess. By wisely choosing not to lower the threshold, the Chancellor has saved hundreds of thousands of self-employed people from very serious difficulties.

“It was also widely rumoured for some time that the Chancellor would use the Autumn Budget to extend the disastrous changes to IR35 laws from the public sector to the private sector. IPSE, however, warned again and again that the changes have caused chaos in the public sector, driving out thousands of contractors and stalling numerous government projects.

“Instead of extending the changes now, Mr Hammond paid heed to IPSE’s warnings and pledged to consult on extending the changes to the public sector and ‘draw on the experience of the public-sector reforms, including through external research’. IPSE stands ready to join the consultation to ensure it takes into account the needs of the legitimately self-employed and accurately reflects the heavy damage the changes to IR35 have caused to the public sector.”

The Recruitment and Employment Confederation (REC) is also pleased with this result, believing that the government should work alongside the recruitment industry in order to make necessary improvements.

REC chief executive Kevin Green, said, “We welcome the news that government has heeded our calls to not rush in the extension of IR35 rules into the private sector and to have a broader consultation on non-compliance.

“We are glad that government is looking at the impact IR35 has had on the public sector and how guidance is working so that we can avoid a similarly rushed implementation.”

He added, “In addition, we are pleased to see the government taking a holistic approach to employment status and tax with the discussion paper announced today.

“We are ready to represent the business community and the recruitment industry to improve these rules and protect the flexibility of our labour market and the wider economy. We will put our energy into making sure that the voice of our industry is heard during the consultation period.”

To find out more about contracting please contact Sophie on 01442 795100 or email sophie.lewis@dolanaccountancy.com.