What’s Happening With IR35 Now?

If you’re a contractor or a business who hires contractors, you’ll most likely be getting quite frustrated at the constant back-and-forth that we’ve had in relation to IR35 in the last few weeks. 

We all breathed a sigh of relief when the then-chancellor Kwasi Kwarteng announced during his mini-budget at the end of September that the IR35 reform would be scrapped, only for this idea to be thrown out just a few weeks later by his successor Jeremy Hunt.

The fact that a repeal was announced in the first place clearly shows that the Government understands and acknowledges there are deeply rooted issues with this controversial legislation, but now that idea has been scrapped, what’s the plan for IR35?

Business as usual

Unfortunately it looks like it is ‘business as usual’ – forget the repeal was ever mentioned and continue with the existing IR35 reform rules. Definitely not what any of us wanted to hear! There is a slight glimmer of hope, however…

Industry experts calling for clarification

Many industry bodies are calling for the Government to address the fundamental problems with IR35. Former Prime Minister Liz Truss previously promised to review IR35 legislation, and so now, in a conversation with ContractorUK, the Freelancer & Contractor Services Association stated that it is urging the new Prime Minister “to keep his predecessor’s commitment to a thorough and comprehensive review of IR35”.

In addition, IPSE’s Director of Policy, Andy Chamberlain, spoke on the day of the IR35 u-turn, calling it a “spineless decision”:

“Today’s announcement will be a huge blow to thousands of self-employed contractors and the businesses they work with. The reforms to IR35 have created a nightmare for businesses seeking to engage talent on a flexible basis, while simultaneously forcing individuals out of business altogether.

“We know that the government is well aware of the problems caused by this damaging legislation – the previous Chancellor said so at the mini-budget and the (previous) Prime Minister made it clear during her leadership campaign. Despite this, it has today taken the spineless decision to row back on its promise to repeal the reforms.

Businesses that were looking forward to an era of less complexity and less cost will have had those hopes dashed today. Our fear is this decision will lead to yet more work being off-shored to other territories and more people being forced to work through unregulated umbrella companies. The supposedly pro-business Conservative government has sent out a clear message today – it does not support people who work for themselves.”

Any chance of another repeal?

Given that we have Rishi Sunak – the person who introduced the reform in the first place – and Jeremy Hunt at the helm, I think we can safely say that a repeal doesn’t look likely in the near future. All we can really hope for is that the Government continues to follow through on their promise to review IR35 legislation and at least provide better clarification and support, improved tools and a fairer appeal route.

If you’d like further information regarding the latest IR35 reform update, or you’re concerned about compliance, please don’t hesitate to get in touch with our accountancy team who can provide expert advice based on your individual circumstances.