IR35 update from the CEO
- 20 Nov 2020
In these times, it can seem as if there are countless threats to the self-employed – from the continuing gaps in Covid support to the tax rises the Treasury is considering – and at IPSE, we are continuously campaigning for you on all these fronts.
I am also very aware, however, that among these threats, there is one that is still uppermost in many of our members’ minds: IR35. I want to assure you that we are still pushing hard on this issue, and I have a couple of important developments to update you about.
As you may have read in a blog by our Director of Policy, Andy Chamberlain, it has been revealed there is an error in the wording of the new IR35 legislation. The upshot of this complex error is that if the legislation is pushed through in its current form, it could mean the end of umbrella companies in the supply chain, agencies having to handle payroll in-house and even contractors’ payments being taxed twice (although HMRC have said there are provisions to stop this). In short, it is a technical error that could lead to drastic consequences in the real world.
HMRC has acknowledged the mistake and said it is working to resolve it. However, we noticed that in the statutory instrument to get the legislation through Parliament, the wording is still exactly the same. This is no small issue, because once set in motion, statutory instruments cannot be changed.
We have quickly worked to raise awareness about this issue and Lord Forsyth, the peer who led the publication of a damning review of IR35, has now tabled a “Humble Address”, which will soon lead to a debate on the IR35 legislation in the House of Lords.
This is a positive development – and we are pleased to have pushed this vital issue back up the Parliamentary agenda – but I want to issue a note of caution too. The government is desperate to push through the changes to IR35 (the fact they hastily launched a faulty statutory instrument only illustrates this further). Therefore, while this may be small spanner in the works, I am afraid those works will keep on turning.
However, I also assure you that we are always pushing on this – publicly and behind the scenes. We are the only dedicated voice for the self-employed and I promise you we will keep pressing your interests on IR35, on Covid support: on any issues where the self-employed need an organisation fighting their corner.
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