Budget 2018 – IR35 reprieve for the private sector (for now)

We all waited with baited breath for news of controversial changes to IR35 in the private sector in today’s Budget.

Indeed, Chancellor Philip Hammond maintained his intention to bring the rules in line with the public sector. However he confirmed that implementation will be delayed until April 2020.

In a somewhat surprising caveat, the changes will only apply to large and medium sized companies.
We are reluctant to see any benefit in this to the recruitment supply chain as no end client would meet the criteria for a small business. However we are working with our advisers to gain proper insight into this aspect of the announcement.

The deferred implementation will hopefully mean less disruption than was experienced in the public sector in 2017, giving hiring businesses, agencies and contractors more time to react and prepare.

Further consultation and improvements to CEST

The Budget fine print confirmed that there will be further consultation on the detailed operation of the reform. This will be published in the coming months and will inform the draft Finance Bill legislation, which is expected to be published in Summer 2019.

It was also indicated that HMRC would work with stakeholders to identify and test improvements to the much maligned CEST tool, before the changes are introduced in the private sector.

Reaction

“The announcement to delay the roll-out until 2020 shows that the Treasury has listened to the concerns of stakeholders like ourselves who have been campaigning hard and will give us time to work more with policymakers to ensure they get it right. A delay will give businesses and freelancers time to prepare for the inevitable complexities of implementation. In an interesting move, the Chancellor decided to level the playing field between public and private sectors, but only for large and medium businesses, thus letting SMEs off the hook.” – Julia Kermode, FCSA

“Whilst today can be seen by some as ‘no news is good news’ I would caution against a ‘keep calm and carry on’ approach.

The government’s drive for reform in this area is well known and publicly accepted as a done deal. With this extra time we sincerely hope that HMRC are going to be reviewing all of the recommendations provided by industry during the recent consultation, including the lessons learned from the abysmal roll out in the public sector, to better refine and improve any private sector reform. Limited company contractors should use this short term reprieve to fully understand IR35 and how it affects their own supply chain, whilst ensuring that they are taking the right advice for when the inevitable reform comes”. – Joe Taffurelli, Liquid Friday

Get ahead with IR35

Liquid Friday will be working closely with our industry partners over the next 18 months and will be there to support agencies and contractors whatever the outcome of the consultation and the final details of the legislation.

With extensive experience supporting agencies in the public sector manage the reforms, Liquid Friday are uniquely placed to help with every aspect of your action plan ahead of April 2020.

We can help with:

• IR35 awareness and training
• Independent IR35 testing
• Feepayer Services
• Supply chain compliance