Despite Sajid Javid’s pledge to review the IR35 reform on the run-up to the election, there was no mention of the off-payroll rules today in the Queen’s Speech - a traditional state opening of parliament that outlines the new government’s intentions while in office. Does this mean IR35 is off the table or was it simply too broad an overview to accurately represent everything the Conservatives plan to get through the door?
No mention of IR35, or any tax reform in general, in Conservative agenda
As previously mentioned, Chancellor Sajid Javid said the anticipated IR35 changes would be reviewed should the Tories retain their government. In discussion with Moneybox host Paul Lewis, Javid said and that he wanted to ensure the reforms were ‘appropriate’ before being rolled out. Despite reassuring listeners that the Conservatives were batting for the self-employed, Javid didn’t sound too committed when pressed for an answer on if the Tories would consider scrapping the off-payroll rules altogether. He instead asserted that the legislation would be included as part of a ‘wider investigation’, as promised in the Tory manifesto, that will ‘look into how new policies could help freelancers’.
“One thing, in particular, I want to look at is the proposed changes to IR35, these are the tax rules that apply to many self-employed people, particularly those that work as consultants,” Javid said. “I want to make sure that the proposed changes are right to take forward so we will be having a review of those proposals and changes as part of our wider self-employment review.”
However, no mention of either IR35 or any other tax reform cropped up in the lengthy Tory to-do list delivered by the Queen today. After the Autumn Budget cancellation earlier in the year, this means that the private sector IR35 reform has still not been addressed in an official capacity since its rollout announcement back in 2018. This adds to concerns across the contracting industry that such a legislative review would have to be turned around at breakneck speed in order to be completed before the 6th April 2020 rollout date, which may prove unrealistic.
Lengthy Queen’s Speech focussed on Brexit and NHS, but no IR35
Alongside global warming, improvements to internet safety and broadband speed, armed forces investment, and the fortification of freedom of speech, the Tories’ bill focused heavily on both Brexit and the NHS. We’ve looked previously at how Boris Johnson’s proposed Brexit could affect contractors, but the promised bolstering of the NHS is particularly pertinent in light of the public sector IR35 reform.
Amongst other strategies, the Queen’s Speech delivered the Tories’ intention to introduce a new visa that ensures fast-track entry to the UK for doctors and surgeons to combat the drop in NHS expertise. Dr Iain Campbell of the Independent Health Professionals Association (IHPA) has spoken out before on how the off-payroll rules have directly impacted the NHS; he's seen first-hand a tangible drop in locum nurses, specialist consultants, and surgeons following the 2017 public sector IR35 reform.
“ONS data shows that the number of self-employed doctors has plummeted by 20k and that we have 11k fewer doctors following the measures,” Dr Campbell says. “The only IR35 tribunal case concerning a medical doctor that ever occurred was that of a junior doctor assisting in surgery and he was found to be outside IR35, yet 100% of health workers have found themselves blanketed inside the legislation.”
“The Government would be well-warned not to overlook the global world in which we live,” he continues. “Just as ONS data shows 11,000 self-employed doctors fled our shores following the public sector reforms, much-needed talent in IT, banking, and finance will do the same. Plus, with Brexit looming large on the horizon these ill-advised reforms could not have come at a worse time.”
Will the IR35 reform still go ahead under the new Conservative government?
After the cancellation of the Autumn Budget, in which many industry experts anticipated the private sector IR35 reform rollout date to be cemented, the general consensus was business as usual. Contractor and IR35 specialists across the industry - from Larsen Howie, Kingsbridge Contractor, Qdos, Brookson Legal, and JSA Services, to ex-tax inspectors Andy Vessey and Carolyn Walsh - were in agreement: make sure you’re prepared for the off-payroll rules regardless. Most potent, perhaps, is tax consultant David Kirk’s comment that “the measure is in the system and the system isn’t about to throw it out.”
Larsen Howie’s IR35 Consultancy Manager Matt Tyler makes much of the same commentary in light of this latest non-development.
“Despite the Conservative party committing to review IR35 as part of their election campaign, it appears that there are no forthcoming changes to the legislation that is due to arrive in April 2020,” Tyler says. “This will come as no surprise to some out there who have been preparing for the changes and are well into putting into motion their plans for the IR35 private sector reform. However, it will come as a potentially nasty shock to those who were banking on cancellation, or at least postponement.”
“Thankfully, it’s not too late to start looking at putting into place a system that will deal with the changes, but I would encourage you to look at it now, rather than later – irrespective of if you are a contractor, client, agency or anything in between!”
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.