If you’re a contractor working in the private sector, you’ll most likely know all about the off-payroll working rules, commonly referred to as IR35 reform. The controversy surrounding changes to IR35 – which will see you lose the right to decide if you are a genuine contractor or a disguised employee when engaged by medium and large companies – means the legislation is often in the media spotlight, usually for the wrong reasons.
So it wasn’t too surprising when IR35 hit the headlines again last week, as speculation increased that unpopular private sector reform may be delayed by two years, until 2023. This was after Conservative MP, David Davis tabled an ambitious amendment to the Finance Bill, calling on the Government to rethink the recently confirmed 6th April 2021 reform roll out in light of a critical House of Lords report and the economic fall-out from Coronavirus.
However, much to the dismay of contractors, the former Brexit Secretary’s proposal was rejected in the House of Commons. The amendment wasn’t selected by the House, meanwhile, the Labour Party was said to have refused to vote on the issue. As a result, the Finance Bill passed to the Committee stage without division.
Does this mean the IR35 reform changes are nailed on for next year?
While critics have rightly pointed out that the Finance Bill will be reviewed again before it’s officially ‘signed off’, at this stage, the changes are set to go ahead – this is despite a number of politicians, including Liberal Democrat Sir Ed Davey, the SNP’s Alison Thewliss and Labour’s Meg Hillier, voicing their dissatisfaction in the House of Commons.
Contractors, therefore, will continue to administer their IR35 status when engaged by medium and large businesses only until 6th April 2021. From then, it will become the hiring organisation’s responsibility to conduct IR35 assessments. The liability, that contractors currently carry when working in the private sector, will be transferred to the party that pays the worker – typically the recruitment agency or the client.
Is this the end of the road for contractors?
No. Granted, some private sector companies blanket placed their contractors inside IR35 in the lead up to the April just gone, as they prepared for the anticipated 2020 introduction – and they may do again next year. However, several high-profile companies that took this approach have since reversed their decision, allowing for genuine contractors to legitimately work outside the rules once more. With just under a year to prepare for the extension of reform, experts have urged private sector firms to get to grips with the incoming changes and prioritise fair IR35 contract reviews.
For contractors on the lookout for outside IR35 opportunities, it’s well worth checking out this useful tool, that names and shames the firms that have banned independent workers.
What can contractors do in the meantime?
Everything you can to ensure IR35 compliance and protect yourself from the risks this legislation poses – from an independent contract review through to IR35 insurance. In addition, experts like Qdos Contractor – who are working with private sector firms to get them ready for next April – have advised contractors to contact clients and recruitment agencies to outline the importance of fair status decisions.
This is working off the basis that there will not be another dramatic and last-minute U-turn in Parliament. But whilst this would likely win the Government back the support of contractors, given the latest developments regarding IR35, independent professionals are advised to start getting themselves ready for 6th April 2021.
With over 20 years’ experience in supporting contractors, QAccounting is one of the UK’s leading contractor accountants. To learn more about our contractor accounting packages, that start from just £95 per month + VAT, please request a callback – one of our friendly and knowledgeable contractor accountants will be in touch.
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