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Finance Bill leaves businesses with just nine months to prepare for IR35 tax rules

The Finance Bill, published today, confirms that the government plans to go ahead with the implementation of IR35 in April 2020.

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REC

Tom Hadley, REC Director of Policy and Campaigns said:

“The government has not taken on our strong recommendation to put its IR35 plans on hold, to conduct a comprehensive impact assessment, and to remove the exemption for small businesses. The draft legislation risks damaging the UK’s productivity and labour market flexibility at a time when it is most needed.” 

“We know from experience that the IR35 rules are a huge problem for employers and contractors alike. Making sure everyone pays the right tax is essential, but the rules need to be clear to be effective. The last thing private sector businesses need at this time of Brexit uncertainty is rushed or poorly-designed tax rules that add further uncertainty to an already fragile business landscape”.

“The government must urgently reconsider its choices and delay changes to IR35 until at least April 2021.”

According to REC members, off-payroll working legislation is among the most difficult tax legislation to understand. With some businesses relying on many thousands of contractors, adjusting to the requirements will be a considerable administrative and financial burden.

Businesses are facing unprecedented uncertainty. In March, employer confidence in the economy hit its lowest point since the REC’s JobsOutlook survey began in June 2016. Businesses are relying more heavily on contractors as a crucial means of harnessing the right skills and expertise quickly rather than waiting months to fill a vacancy.