Self-employed sector left disappointed after draft finance bill release

Many business and self-employed organisations are warning against the IR35 private sector changes that are set to take place next year.

Federation of Small Businesses and the Self-Employed (FSB)

The FSB is urging policymakers to delay roll-out of the switch, warning that its introduction following a period of sustained political uncertainty and stuttering economic growth, risks significant disruption to a quarter of a million sole traders.

FSB National Chairman Mike Cherry, commented, “Pressing ahead with IR35 changes in April with no regard for the other pressures facing businesses is a reckless move.

“Left unamended, this bill could easily usher in an environment where firms in need of expertise in the short term steer clear of the self-employed community because they’re afraid of making an incorrect assessment, which would be damaging for all concerned. A lot of smaller firms that rely on sole traders have no experience of navigating IR35.

“The Government will tell you that switching responsibility for off-payroll arrangements in the public sector has had a limited impact. It fails to acknowledge that the vast majority of businesses do not enjoy access to the beefed-up HR teams regularly found in public bodies.

“Even where firms do have dedicated HR personnel, their experience of taking responsibility for these arrangements is usually limited: large corporations have found the rules hard to navigate. And they’ll be reliant on a CEST tool which – by HMRC’s own admission – delivers an undetermined result in a big proportion of cases.

Recruitment and Employment Confederation (REC)

Tom Hadley, REC Director of Policy and Campaigns, added, “The government has not taken on our strong recommendation to put its IR35 plans on hold, to conduct a comprehensive impact assessment, and to remove the exemption for small businesses. The draft legislation risks damaging the UK’s productivity and labour market flexibility at a time when it is most needed.”

“We know from experience that the IR35 rules are a huge problem for employers and contractors alike. Making sure everyone pays the right tax is essential, but the rules need to be clear to be effective. The last thing private sector businesses need at this time of Brexit uncertainty is rushed or poorly-designed tax rules that add further uncertainty to an already fragile business landscape”.

“The government must urgently reconsider its choices and delay changes to IR35 until at least April 2021.”

The Association of Independent Professionals and the Self-Employed (IPSE)

IPSE’s CEO Chris Bryce, said, “Recent research shows how crucial freelancers are for companies to create, innovate, improve productivity and compete on the global stage.

“Extending these rules will put a huge extra burden on organisations which depend on the use of highly-skilled flexible workers to help them succeed. With such short notice, the Treasury has left businesses to choose between access to the skills they desperately need and trying to rush implementation of rules even HMRC itself doesn’t understand.

“Make no mistake, this is nothing less than an unfair, unnecessary and unworkable tax on the very smallest of business, introduced by government at a time when Britain needs all the flexibility and agility it can get.”

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