Less than one week after the Budget confirmed that private sector IR35 reform would be enforced on 6th April, the Government has performed a dramatic U-turn and announced changes to the off-payroll working rules will be delayed for one year as a result of the COVID-19 outbreak.
The Chief Secretary to the Treasury, Steve Barclay, broke the news in last night’s Budget debate in the House of Commons, much to the delight of contractors, recruitment agencies and private sector companies.
He said: “The Government is postponing the reforms to the off-payroll working rules” before explaining “this is a deferral in response to the ongoing spread of COVID-19 to help businesses and individuals. This is a deferral, not a cancellation and the Government remains committed to introducing this policy.”
This means that contractors will retain the right to determine their own IR35 status when working in the private sector until 6th April 2021. As a result, medium and large private sector end-clients will not become responsible for administering the IR35 rules for 12 more months. The IR35 liability, which was due to transfer from the contractor to the fee-paying party in the supply chain, will remain with the contractor until next April.
In reaction to what is a big victory for contractors, in particular, our CEO, Seb Maley, issued this response:
“The Government has seen sense and made the right call in these unique circumstances. Given the economic challenges that lie ahead of the UK, now certainly would not have been the right time to roll out needless tax changes that endanger hundreds of thousands of contractors’ livelihoods.”
“That said, this is only a delay, albeit a very welcome one. It does, however, give private sector firms vital time to prepare for reform which can only be a good thing for contractors. What matters now is that businesses use this time wisely.”
We will provide an in-depth review of what this means for the contractors, recruitment agencies and end-clients we support and outline appropriate steps to take when the full details have been issued by the Government.
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