IR35 | 'Recruiters must prepare for reform'

'Recruiters must prepare for reform'

A House of Lords Committee is set to probe the government’s upcoming off-payroll working rules, which are expected to come into effect in April this year.

The finance bill sub-committee revealed this week that it has launched an inquiry into the Finance Bill 2019-20, the FT Adviser reported. The inquiry will have a specific focus on the government’s proposal to extend the new IR35 legislation.

This latest inquiry will focus on how the rules have affected the public sector over the past 20 years, how it will impact private businesses, whether the system is clear enough when it comes to determining the tax status for workers and if there could be simpler and more improved ways in which the objective of the new rules can be achieved.

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While the latest inquiry is welcomed, industry expert Seb Maley, CEO of IR35 specialist Qdos, believes that this should have been carried out months ago and recruiters must start to prepare for the upcoming reform now.

"It's vital that the Lords Select Committee looks at the facts around IR35 changes. Has public sector reform worked? No, not when you consider that thousands of contractors were unfairly forced inside IR35. Is HMRC's IR35 tool capable? In its current state, it simply isn’t fit for purpose. What effect might further IR35 reform have on contractors? If mismanaged, there is a risk the private sector will repeat the mistakes made in the public sector,” Maley said.

“Regardless of this inquiry and the ongoing IR35 review, recruiters and end-clients must continue preparing for reform, which will be introduced on 6th April.”

Other industry experts are still concerned about the changes to the legislation, with Julia Kermode, Chief Executive of the Freelancer & Contractor Services Association, condemning the changes as being ‘fundamentally flawed’.

She added: “The proposed legislation changes are fundamentally flawed and are already having a very detrimental impact on businesses and professional contractors. We are seeing some firms opt for cheaper resources overseas and the potential impact on the UK’s economy is significant.

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“Therefore, it is essential that we join together for this protest so that we can make ourselves heard by MPs who are the only ones with the power to prevent this disastrous legislation becoming a reality.”

The new rules, which will launch in April 2020, will see every medium and large private sector business in the UK become responsible for setting the tax status of any contract worker they use.

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