Off-payroll working rules (IR35) were introduced in the year 2000 to ensure that people who work as contractors through their own limited companies pay the same level of Income Tax and National Insurance Contributions as employees. Following a reform to the rules in April 2017, public-sector organisations who took on contractors became responsible for ensuring that both they and the workers they engage were paying the correct amount of tax, which has been an effective method of improving tax compliance. 

 

At the Autumn Budget in 2017, the government revealed its plans to start a similar plan for tackling non-compliance in the private sector. A year later, during the Autumn Budget in 2018, it was announced that plans for the reform would be extended to medium and large organisations, and the changes would kick in from April 2020. 

 

The devastating effects of the coronavirus pandemic caused a delay of one year to the proposed changes, which produced a mass sigh of relief within the contracting industry. It was a small flicker of positivity in an otherwise dreadful situation. 

Last month, The House of Lords Economic Affairs Finance Bill sub-committee released a report titled Off-payroll working: treating people fairly which essentially said that a wholesale reform of IR35 would be required. This report seemed to be completely ignored by HMRC, as the IR35 was included in the second reading of the Finance Bill last month with no comment on the House of Lords' suggestions. 

 

IR35 news has been largely quiet since then, until yesterday when it emerged that MPs would be meeting at the House of Commons next week to vote on a suggested amendment to the 2019/21 Finance Bill. The amendment proposes that the private sector roll-out is postponed until the tax year 2023/24.  

 

This is very welcome news in an otherwise worrying time, and goes to show that contractors' voices are being heard! 

 

We will update you as soon as we hear of any concrete developments next week. You can read the full order paper here.