Government ploughs ahead with IR35 changes in the face of opposition

Close-ish, but no cigar. In the end there was considerable Parliamentary support for delaying the IR35 changes in the private sector, but not enough to overturn the huge majority enjoyed by the government. Amendment 20 to the Finance Bill, which would have pushed back the IR35 changes to 2023, was defeated by 317 votes to 254.

Many of you contacted your MP and asked them to support the amendment – thank you. Thank you too to the backbench MPs that spoke out so forcefully during the debate. David Davis, who tabled the amendment, Sir Ed Davey and Alison Thewlis from the SNP all made compelling arguments against continuing with this damaging legislation. And Pat McFadden, the Shadow Economic Secretary spoke very well from the Labour front bench, making it clear that Labour would support the amendment (something we hadn’t been certain of earlier in the day).

We certainly managed to push this issue up on the agenda. The government, which has always known these changes are highly contentious, was left in little doubt last night that what they are doing here is immensely unpopular. All the opposition parties are against them, as are twelve of their own MPs (at least these are the ones brave enough to vote against their own government).

IPSE will not stop lobbying on this issue. This is simply the wrong policy at the wrong time and we will continue to make that argument. As the economic situation deteriorates due to the coronavirus crisis it will, in our view, become more and more clear that the inherent complexity of IR35 will work against the recovery. At the same time, we must face the reality that Parliament can no longer stop this, and the government, for the time being at least, is intent on bringing it in.

But the government is also well aware of the inherent flaws within our tax system and recognises the problems around employment status. IR35 is a sticking plaster which tries, and largely fails, to cover up these flaws. IPSE has spoken to the Treasury about the need for a fundamental review of the tax system and we hope to work with them to introduce some meaningful reforms. If we can make progress on this, IR35 could become redundant.

Thank you again for your help with our campaign. Because of you we got a vote on the floor of the House of Commons (this wasn’t guaranteed) and we demonstrated, again, that there are well-founded concerns about the legislation. It is disappointing we did not get the result we hoped for, but this is only a part of the wider discussion about getting a fair deal for freelancers. We are working harder than ever to press the government to review and reform the tax system and create something that is fair to freelancers and employees alike. We are using our channels into government to press this proposal and if we are successful, IR35 will not matter anyway. That is the bigger picture here and that is the vision we will continue to strive for.

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Andy Chamberlain

Director of Policy and External Affairs

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