Industry bodies call for Government to delay IR35

UK industry is calling for the Government to delay plans to extend the IR35 tax law to the private sector.

Following Government consultation, analysis found that many respondents were urging for a delay to the process to give businesses more time to properly prepare for the changes.

IR35 is the collective term for off-payroll staff, with the changes to these rules set to come into effect in April 2020.

The changes mean that businesses will become responsible for assessing the employment of any IR35 workers that they engage. However, there are exceptions, such as the reforms only affecting medium and large businesses, meaning the 1.5 million smallest firms in the UK will be unaffected.

The aim of the IR35 changes, according to HM Revenue & Customs (HMRC), is to close tax loopholes that allow people that are working through personal service companies to avoid tax contributions, with the Government estimating that this will cost £1.3 billion by 2024.

The consultation process saw responses from the Confederation of British Industry (CBI), the Institute of Chartered Accountants in England and Wales (ICAEW) and the Association of Independent Professionals and the Self Employed (IPSE).

Some of these industry bodies expressed concern about the current timescale for the rollout, stating that most firms take around 12 months to implement new IT systems and related systems. But the legislation is not due to be confirmed until November, as many are calling for a delay until April 2021.

A spokesperson from HMRC, said: “Following consultation the Government announced that it will extend the reform of the off-payroll working rules to all medium and large organisations from April 2020.

“The Government listened to the concerns of individuals and businesses and delayed extension of the reformed rules until then to ensure they have time to prepare.”