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IR35 is postponed, now we can all breathe a slight sigh of relief

by Sellick Partnership | 23 March 2020

The Government has finally listened and delayed the roll out of their proposed change to IR35 in the Private Sector by 12 months, giving contractors and organisations that rely on temporary workers another year to prepare. This timeframe will also hopefully allow the Government to do a proper review into the reforms and make changes to ensure it has minimal impact on the UK contract sector.

Steve Barclay, the chief secretary to the Treasury said: “I can also announce this evening, madam deputy speaker, that the government is postponing the reforms to the off-payroll working rules, IR35, from April 2020 to the 6th April 2021.

 “Government will therefore not move the original resolution tonight, but will shortly table an additional resolution confirming that we will reintroduce the off-payroll working rule provisions by amending the bill, with a commencement date of 6th April 2021.”

“This is a deferral in response to the ongoing spread of COVID-19 to help businesses and individuals.

“This is a deferral, not a cancellation and the government remains committed to reintroducing this policy to ensure people working like employees but through their own limited company pay broadly the same tax as those employed directly.”

This is great news, and something that we have been hoping for, but it doesn’t mean that we can all rest and forget about it until next year. Instead, we should use this time to continue preparing for the inevitable, and assist the government where we can in their review.

Sellick Partnership Finance Director Mike Hoyle commended the government for making the right decision at such an uncertain and unprecedented time. He said

“We are facing months of uncertainty as a result of the current COVID-19 outbreak, and the worry around IR35 was one more thing we were all having to deal with, so now that is off the table we can breathe a slight sigh of relief.

“I hope this news offers some comfort to contractors and clients, and will allow us all to work with some degree of normality. I would however advise everyone to keep the changes to IR35 in the Private Sector at the front of their mind. It is coming, and I think there will be much more stringent checks and enforcement when it is eventually implemented as a result of this extension.

“For that reason all clients and candidates that are likely to be effected should keep in regular contact with their recruitment agency or continue to seek advice where necessary. That way we will be much better prepared and the roll out should have a minimal impact.”

Director Ray Wareing who heads up our Finance & Accountancy recruitment team is delighted what the news will mean for UK contractors and our economy. He said

“The postponement of IR35, the promise of £330 billion worth of business loans and the reduction of interest rates are all much needed and have been met with delight from organisations and contractors across the UK. It has allowed us all to breath a little easy for the next 12 months and make the year ahead easier to manage

“Without this relief the UK economy would take an even bigger hit. Instead, the deferral, and government relief plans will allow contractors and businesses to continue with some degree or normality through this unprecedented time.

“However, I would urge businesses and contractors to continue focussing on what IR35 will eventually mean for them. 12 months is not a long time – as we have already witnessed – and preparations will need to begin again soon if we are all going to be ready for the April 2021 deadline”.

What does this delay mean for contractors?

Contractors can carry on as normal, making their own IR35 assessment with very little impact until the new deadline of April 2021. Any preparations that have been made up until now will however still be relevant, so keep these in mind and continue to seek advice form specialist sources where appropriate.

What does this delay mean for clients?

Businesses can continue to rely on contract workers as they always have, and they have another year to prepare. Seek advice and discuss what implications IR35 might have, and ensure you plan for these in budgets and strategy for 2021. 

Our team are still on hand to answer any questions you might have regarding IR35, please feel free to get in touch.