It’s fair to say that British politics has been on shifting sands for the last few years. The Brexit game of will-they-won't-they and Downing Street’s revolving door have dominated newspapers and business decisions since 2016. Contractors have also had another concern in the form of the IR35 reform, which was rolled out to the public sector in April 2017 and is due to come to the private sector on 6th April 2020. However, the Chancellor’s snap decision to cancel this year’s Autumn Budget late last week has thrown whether that April deadline will be met into doubt.
Autumn Budget cancelled
The Autumn Budget 2019 was originally scheduled for November 6th and would’ve been Sajid Javid’s debut as Chancellor of the Exchequer. However, it was decided on Friday 25th October to scrap the Budget due to the further delay of Brexit and the government’s push for a December General Election.
Javid wrote to the Treasury Select Committee, saying:
“Parliament has voted for a delay to the UK’s withdrawal from the European Union, so the Government is now calling for a General Election. I can, therefore, confirm that have decided not to bring forward the Budget on 6 November.”
It's been speculated that the cancellation of the budget could mean the postponement, or even scrapping, of the impending private sector IR35 reform. The likelihood of this happening, however, is slim.
Will IR35 be postponed - or scrapped - along with the Budget?
As reported on by SIA, Julia Kermode, Chief Executive of The Freelancer & Contractor Services Association (FCSA), commented on whether the Autumn Budget 2019 cancellation will affect whether the IR35 reform is extended to the private sector on 6th April 2020 as currently planned.
“It was always going to be an ambitious move by the Chancellor to hold a budget on 6 November, so close to the Brexit deadline, so it is no surprise that it has now been cancelled,” Kermode says.
“It now seems likely that there will be a Spring Budget as the Government has to have a finance bill in order to collect tax,” she continues. “With the off-payroll legislation already drafted, it is likely that it will be included in the next budget and could be rushed through without proper scrutiny. This is concerning as I would like to remind the Government that it is important to also legislate for umbrella firms to be regulated from April 2020 in order to deal with those firms purporting to be umbrellas when they are, in fact, tax avoidance schemes.”
Continue to prepare for the IR35 reform, despite the Budget cancellation
Kermode’s opinion that IR35 will continue as planned despite the cancellation of the Autumn Budget is shared by the majority of the industry, including Qdos, Brookson Legal, JSA Services, and ex-tax inspector Carolyn Walsh. Most potent, perhaps, is tax consultant David Kirk’s comments to Contractor UK. “I’m pretty sure that the delay to the Budget won't lead to a delay to the IR35 reforms,” he says. “The measure is in the system and the system isn’t about to throw it out.”
It’s important to be prepared for clients to react rashly to this new uncertainty surrounding IR35. The way has already been paved by the likes of HSBC, RBS, and Barclays, and while blanket determinations and pushing contractors to PAYE en-masse aren’t conducive to a modern business plan, it seems to be the risk-averse mode du jour.
The implementation of the legislation, if rushed, could be damaging to many private sector contractors. It would be prudent for end-clients, recruiters and limited company contractors alike to continue preparing for the IR35 reform, including investing in contract and working practices reviews and ensuring that any advice on how to stay outside IR35 is followed closely.
How Larsen Howie can help you prepare for IR35
Should you want some peace of mind, whether you’re a contractor, recruiter, or end-client, we offer a full contract review amongst other services to help you prepare for IR35. We’ll give a pass or fail based on the current contract held, along with comprehensive comments on how to improve any problem areas. Additionally, we offer IR35 investigation representation from our Head of Tax and ex-Qdos IR35 expert Andy Vessey ATT should it go to tribunal.
For any further information or advice, please call us on 01163 800 400 or drop us an email. Alternatively, take a look around our Knowledge Hub for more IR35 advice, industry news and contractor guides.