Tuesday 7 January 2020 4:05 pm

Government to review rollout of controversial IR35 tax reforms

The government said today it will review the rollout of controversial tax plan IR35 which is due to take effect in April 2020.

IR35, which aims to prevent workers from disguising themselves as freelance contractors as a way to pay less tax, is being extended in April.

Under the changes private sector employers will be responsible for assessing whether or not contractors need to pay income tax and national insurance contributions.

Read more: What is IR35? Everything you need to know about the tax coming to the private sector

Today, the Treasury said it was launching a review of the rollout of changes to off-payroll working rules after concerns were raised by affected individuals and businesses.

In November, chancellor Sajid Javid pledged to examine the controversial reforms initiated under his predecessor Philip Hammond.

Financial secretary to the Treasury Jesse Norman said: “We recognise that concerns have been raised about the forthcoming reforms to the off-payroll working rules.

“The purpose of this consultation is to make sure that the implementation of these changes in April is as smooth as possible.”

The government said the review would be concluded by mid-February and said it would engage with individuals and businesses on their experiences of the implementations of the reforms.

Read more: ‘Damaging’ tax changes set to hit self-employed workers

The government said it would also launch a separate review to explore how it can better support the self-employed.

It said this would include improving access to finance and credit, making the tax system easier to navigate and examining how broadband can boost homeworking.

The chairman of the Federation of Small Businesses Mike Cherry called for a delay to the rollout of the new rules in the light of the review.

“This important review presents an opportunity to reassess our flawed off-payroll legislation.

“We’ve already heard big corporations say they’ll pull the plug on contractors if planned changes to IR35 go ahead in April.

“We have to remember that we’re in a global competition for talent. We need to make the UK a better, not more restrictive, place to do business.”

Read more: HMRC collects nearly £10bn via tax probes

Julia Kermode, chief executive of the Freelancer & Contractor Services Association called today’s announcement “nothing short of an insult”.

She said: “This seems to be another meaningless review from a government who seems intent on bulldozing ahead with its plans anyway.  They are expecting the review to be completed by mid-February which is simply not long enough to consider the deeply complex range of issues that the off-payroll legislation is throwing up.  

“HMRC has stated that it will be continuing its preparations to roll out the reforms in April come what may. We have also learned today that the review will focus on the implementation of the reforms rather than the reforms themselves which is not what was suggested and is not what is needed.  

“I fear that today’s pledge is simply the government paying lip-service to empty election promises and nothing short of an insult.”