After the passing of Schedule 1 of the finance bill 2019-21 yesterday, it has been cleared that off-payroll rules will now certainly introduce in private sector from April 2021. It was the last realistic opportunity for MP’s to make changes to the reporting stage in order to prevent implementation of these draconian measures in April 2021 but it seems that all the hard work done is gone in vain.
There was an amendment done in the finance bill by conservative MP David Davis and liberal democratic MP ED Davies to postpone these reforms until 2023-24 but this motion later defeated yesterday on 1st July 2020. Now, after the reporting stage, it is heading towards third reading and then through House of Lords, a process largely ceremonial in nature. The previous proposal made for postponing the introduction of off-payroll rules in private sector for further 2 years falls short of majority by 63 votes.
Note - Previously, these reforms were taking place from April 2020 but due to the impact of coronavirus outbreak, it has been delayed by the government till next year.
Statement by Liberal democratic MP ED Davey
Liberal democratic MP ED Davey said that it was necessary that legislation must be reviewed in full – If it’s to be done in good faith but I am afraid to see the behaviour of the government in relation to implementation of this legislation. Its look like that government has breached the faith of around 5 million self-employed business owners of the country.
Statement by Qdos CEO Seb Maley
Seb Maley said that the government has continuously ignored the compelling arguments made for rethinking of the legislation. Despite number of concerns raised by MP’s who also exposed the legislation flaws and tells that changes are not necessary, it seems there is no turning back now. Even, raising the tax receipts becomes the priority of the treasury during coronavirus crisis that wrongly force contractors into “Zero rights employment” as a result of the reform. This reform is short sighted and if not managed properly, it may prove to be a big risk not only for contractors but for hiring recruiters and organisations too.
Statement by CEO of contractor calculator and director of stop the off payroll tax campaign “Dave Chaplin”
Dave Chaplin says that even after campaigning for 4 years, it’s been extremely disappointing that we are failed in stopping this legislation. We and our 4000 campaigners worked very hard and did everything so that these draconian measures should not be implemented in the private sector but it seems that we are failed. Even finance bill sub-committee report in the house of lord also criticised this legislation and convey the damaging effects these changes may put on UK’s flexible workforce. He also said that business firms should not take it as a fear and hire freelancers compliantly with careful planning. He also said that going further over the next year after the release of binding authorities, we will get more clarity from the courts – there may be chances that self-employed people will get favoured and a legal platform will be provided upon which firms can hire contractors taking care of compliance without any fear of future repercussions.
Start the preparations now
Now, Introduction of off payroll rules in the private sector is just a year ahead and it’s the time that businesses should take responsibility and start their preparations for the IR35 reforms. Businesses must take measured approach and give priority to the accurate assessments before engaging contractors into your business. However, firms can continue to engage with contractors which are genuine, compliant and out of IR35 regulations.
Businesses who banned the contractors altogether or blanked-placed them inside the IR35 regulations should reconsider their view point immediately. Due to pending legislation, many lives & livelihoods of contractors are already impacted and number of enquiries already raised by the contractors who want to close down their limited companies because of change in IR35 rules and regulations.