IR35 reform wasn’t mentioned in the Economic Update in July, however it was included in the acompioning paper, ‘A Plan For Jobs’, which stated “… businesses and individuals do not need to implement and adjust to the reform while dealing with the economic impact of COVID-19.”
Since last week’s lockdown announcement, a subsequent delay to IR35 seems more likely. In fact, one could argue that the economic impact will be felt for decades. Knowing the history of IR35 reform, the likely delay would be an additional 12 months, to April 2022.
An IR35 reform delay would be welcome news to businesses experiencing a turbulent year, and who rely on contractors to fill short-term, highly skilled roles. IT would also likely be welcomed by PSCs, especially those impacted by the pandemic, who’ve received little support from the government if they have been out of work as a direct result of Covid-19.
So how likely would a further delay be? We know it’s the last thing the majority of MPs want to further delay, despite numerous calls for it to be scrapped altogether. We know companies have already prepared, some blanket-labelling their contractors inside IR35, some reducing contractors, and some scrapping contractors altogether in favour of employing instead. We also know that many PSCs have closed down, with contractors preferring the perceived security of employed positions over contracting inside IR35. In fact, reform is expected to halve the UK’s contractor workforce.
In short, the delay is possible, but not highly likely at this stage. Of course nothing is certain in this current unprecedented climate – businesses and contractors should continue with reform preparations until they hear otherwise.