I suspect that in amongst the election half-truths, the myriad of misleading statistics and unlikely promises of tax cuts/increases, Brexit cancelled/delivered and as much jam tomorrow as you can eat, one issue about which most people will not be remotely concerned is Off-Payroll working, aka IR35. That said, there are hundreds of thousands of contractors who a) will be affected by it, and b) have a vote. Yet could the Seventh Calvary be riding to their rescue from an unexpected quarter? The very fact of the election has meant that the Budget planned for this week has had to be cancelled, so does this mean that IR35 might therefore be postponed?
The Association of Taxation Technicians (ATT) thinks so. Their argument, as outlined in a press release last week, is that “the longer the delay to the Budget and Finance Bill, the longer businesses will have to wait for the final legislation which will introduce these controversial changes to the off-payroll rules – leaving businesses with a greatly reduced and unrealistically short time frame in which to adapt to the changes.”
The ATT is not the first to suggest a delay would be a good idea. In June this year, the website IT Contracting, reported a number of organisations making a similar case for delay, with KPMG saying that “although a delay is preferable, if the reforms to go ahead … HMRC should review the new implementation after two years, ‘to allow for improvements in light of the learnings from tax returns submitted following the first tax year of operation’.” The Association of Chartered Certified Accountants’ view is that…”it may be advisable to consider a delay to introduction to allow for changes to CEST to be digested and full consideration of the implications from the public sector reform,” while the recruitment industry body, the Association of Recruitment Consultancies, “notes that the original public sector implementation has yet to be reviewed. It had been due to be reviewed by the Treasury Select Committee, but this was cancelled due to the last general election.” Then in September 2019, as reported extensively at the time, the Institute of Chartered Accountants in England and Wales said the start date should be pushed back to 6 April 2021
My own view is that the cancellation of the Budget and the delay to normal business decision-making caused by the election mean there is now not enough time to ensure this complex legislation is fully considered. Worse, if it is passed in a rush, this could lead to further amendments correcting the shortcomings in 12 to 24 months’ time. In recent years, we have had far too many examples of this, so now would seem an appropriate time to draw breath, listen to the concerns being put forward about the proposed legislation from many quarters and ensure that what changes are eventually introduced are fit for purpose.
I would be interested in the views of contractors, recruiters and any other affected parties so please feel free to get in touch.
Stewart McKinnon, Director