IR35: no more delay for private sector

Despite opposition, reforms to the IR35 off-payroll working rules will definitely go ahead in April 2021.

A year’s delay to the changes, due to Covid-19, made 6th April 2021 the hastily pencilled-in start date.

To extend that rather clumsy analogy, that date has now been over-written in Sharpie, after Schedule 1 of the Finance Bill 2021 was passed through the Report Stage unchanged.

Effectively, the Report Stage was the last real opportunity for MPs to prevent a 2021 implementation of the legislation in its current format. The Finance Bill now proceeds to its Third Reading in the House of Commons and then goes through the Lords, a ceremonial step for any Act of Parliament.

IR35 private sector – what was debated?

Of numerous proposed amendments to the IR35 Offpayroll legislation, only three were chosen for debate by the Speaker:

  • An amendment requiring a comprehensive review of IR35 precedes any private sector implementation (tabled by Lib Dems)
  • An amendment proposing a further to delay of two years (tabled by a cross-party group of politicians led by Tory MP David Davis)
  • An amendment preventing a rollout until employment rights match any “inside IR35” status assessments (tabled by the same group)

Of these, only the two year delay was ultimately voted on, and the amendment fell short of a majority vote, losing by 317 votes to 254.

No turning back

The decision to delay the IR35 reforms to 2021 can now officially be regarded as a temporary hiatus, to allow the pandemic to pass.

In short, whatever else is happening with the economy and the country, these changes are going ahead – there’s no turning back now.

From 6th April 2021 every large and medium private sector business in the UK will be responsible for setting the employment status for tax of workers supplying their services through a limited company.

Additionally, liability for unpaid PAYE tax and NIC will shift to the party paying the limited company; that may be the client, recruitment agency or third party engager.

What now?

Flexible workforces will be more essential than ever in getting the post-pandemic economy moving. So, right now, the key thing is to restart the conversation when it comes to IR35.

Contractors, agencies and hirers all need to take the time to understand their risks and obligations and options ahead of April 2021.

Now we know the “when” for definite, we can help you get to grips with the what, the why and the how of IR35. As we did with the public sector back in 2017, we’ll be working collaboratively with all points of the supply chain.

Liquid Friday Group Head of Operations, Joe Taffurelli, said:

“I know that now is a challenging time for all contractors across the country, and confirmation of IR35 reform will be a real hurdle for contractors and agencies to overcome. Liquid Friday is here to help contractors and agencies to find the most effective solution and ensure that the whole supply chain is protected throughout the transition.”

Visit the IR35 Hub