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The IR35 reforms review needs to be more than an election tactic!

by Ray Wareing | 27 January 2020

Earlier this month the government finally announced plans for a review of the proposed IR35 reforms that are due to hit the private sector in April this year, however the news has been met with very mixed responses. With a little over two months to go before the reforms are implemented we are still unsure as to the true impact they will have, and it is unlikely that this review in its current form will alleviate the worries of our contractor, candidate and client base.

The timing of the review is wrong. A thorough independent review that will look at the issues that have been raised, consult the market and detail amendments simply cannot happen in the short time left until the planned implementation date. I therefore worry that the government will use this ‘review’ as an obligatory pre-election promise and will not look closely enough at the implications this will have on the contractor market across the UK.

I am also concerned that the basis of the review isn’t right. In late November, campaigning for Tory votes, Chancellor Sajid Javid said that he wanted to “look again at the proposed changes to IR35 to make sure that they are right to take forward”. Now, however, it looks as if the review will probe the reforms’ implementation, not the reform as a whole which is a mistake in my opinion.

At our IR35 briefing event in November last year, we heard the concerns of contractors first-hand, and many of the same worries still stand and are unlikely to be solved unless the implementation date is delayed, and a more thorough review is launched. They raised concerns such as businesses not being ready for the changes, a lack of client understanding and a blanket ban on limited contractors by many clients across all sectors.

Another issue that the review will likely skim over is the impact on ethical behaviour across the contractor market, something that is hugely important in my opinion.

In a recent Recruiter article, Neil Carberry, CEO of the Recruitment & Employment Confederation, said: “Pushing ahead with an approach to taxing contractors that is not fit-for-purpose will punish ethical businesses, incentivise non-compliance and harm workers.

I wholeheartedly agree with this comment, and it is becoming an even bigger worry for me and my team. If this review is going to work, it must consider monitoring and regulating non-compliant umbrella companies. We have a list of preferred umbrella companies for a reason. Each one is vetted to ensure that our contractors, our clients and we are protected as far as possible from both financial and criminal liability.

The government also needs to look closely at the mistakes that were made in the public sector roll out. A lack of communication, panic and timing all culminated in several key issues and many contractors are still feeling the adverse effects as a result. The government needs to learn from these mistakes, and at least adopt a phased approach to the private sector roll out and offer some clarity to businesses around what the implications will be for them.

My worry is that there is a similar feeling of panic and unrest with the current plans, and there are a number of extremes across the market. On one hand some clients are panicking and putting a blanket ban on contractors stating that they will only work with temporary staff through PAYE, with others using this review as another excuse to delay their plans, something that we have been advising them not to do. Organisations and contractors need to be doing all they can to prepare and seek advice from recruitment professionals like Sellick Partnership.

Finally, the review needs ample time to consult the market and appease any concerns businesses, contractors and recruiters have about the roll out, and I don’t believe that is the case. For a thorough, independent review to take place the reforms will have to be delayed giving everyone time to prepare. Without these preparations, and a decent consultation process, we are in danger of heading for the same mistakes and challenges we faced in 2017, which would be very damaging for the private sector contractor market.

If you are worried about IR35, or would like some advice, head over to the dedicated section of our website.

Alternatively, you can get in touch with myself, or a member of my team and we will be more than happy to help.