In March this year, the Government has delayed the roll out of its IR35 Off Payroll changes for a year. What are the latest updates on IR35?

Find out more about the postponement of the reforms here

Why postpone IR35?

The delaying is in order for the Government to refine the process in light of pressure and feedback from business groups.

The House of Lords have also weighed in, publishing their findings which again highlights the current flaws in the system.

Their opening statement reflects their findings on the way IR35 has worked in the Public Sector to date:

“It is right that everyone should pay their fair share of tax. But the evidence that we heard over the course of our inquiry suggests that the IR35 rules— the government’s framework to tackle tax avoidance by those in ‘disguised employment’—have never worked satisfactorily, throughout the whole of their 20-year history. We therefore conclude that this framework is flawed.”

They also go on to say in trying to redress the tax imbalance:

‘The government made this decision after considering the issue too narrowly, in terms of its tax take. It has severely underestimated the costs to business of implementing the changes. It did not take full account of concerns raised by stakeholders. And it did not analyse sufficiently the unintended behavioural consequences of the proposed reforms or their wider potential impact on the labour market, and on the gig economy in particular.’

What’s Next for IR35?

We know the economy is in decline due to Covid 19, and businesses are concerned around recovery. We are hoping that the Government take the advice of the House of Lords. We hope they commission an independent review of the whole Off Payroll issue.

This is to develop an approach that is fair, consistent, easy to administer and doesn’t discriminate against certain sectors or worker groups.

Watch this space to find out Governments response!

Click here to view the full House of Lords findings. 

Click here for useful tips on IR35