Liberal Democrat Manifesto promises review of IR35 reform

There is a decision for contractors to make

It’s been a busy few weeks on the campaign trail, with the Conservatives, Labour and the Liberal Democrats each unveiling their respective Manifestos ahead of December’s General Election.

Interestingly, it was only the Liberal Democrat Manifesto that contained any mention of IR35, which has arguably been the biggest issue impacting UK contractors for nearly two decades. To the delight of contractors, Party leader, Jo Swinson, promised in her ‘Plan for Britain’s Future’ to “review recent proposals to change the IR35 rules.” 

Neither the Conservatives nor Labour chose to focus on the IR35 legislation, which suggests that if either of the two main political parties holds the keys to Number 10 Downing Street next month - alone or as part of a coalition Government - IR35 reform looks likely to go ahead next April.  

This is despite the continued campaigning against the introduction of further changes to the IR35 legislation, which will result in contractors losing the right to set their own IR35 status when working with medium and large businesses - similar to reform introduced in the public sector in 2017. 

Lib-Dems recognise issues important to contractors 

Nonetheless, that the Liberal Democrats have promised to at least review the impact of controversial changes to the IR35 rules has been welcomed by contractors and many sector experts, including Qdos. CEO, Seb Maley, described Jo Swinson’s pledge as a “bold but very welcome statement of intent from the Liberal Democrats, that clearly recognise the importance of the independent workforce.”

While a potential review of IR35 changes is certainly a positive step in the right direction, we mustn’t get ahead of ourselves. An examination of the off-payroll working reforms will only materialise if the Liberal Democrats form part of the next Government. Even then, a review would not necessarily result in the scrapping of these changes, which as we approach 2020 are now only months away. 

Conservatives remain tight-lipped

As you might expect, the Liberal Democrat’s pledge has also drawn attention to the fact that the existing Government has kept very quiet about IR35 in the recent opportunities it has had to discuss the legislation. Even the Labour Party, that introduced the controversial rules nearly two decades ago, has started making some of the right noises in the time that has passed since its Manifesto launch. 

At the Small Business Debate event, held on 25th November by IPSE, Enterprise Nation and several other organisations, Labour MP, Bill Esterton, apparently said: “We absolutely can’t see it rolled out into the private sector the way things are at the moment.”

When quizzed further on this by IPSE’s Andy Chamberlain, who asked Mr Esterton via Twitter if this is a Labour policy, the MP for Sefton Central replied simply with “absolutely.” However, it seems as though Mr Esterton’s Tweet has now been deleted.

More information might emerge regarding Labour’s plans for IR35 in the coming days or weeks. Nonetheless, the current Government is left in a tricky position. As it stands, the Conservative Party is the only major political party that hasn’t addressed IR35 in its General Election campaign. With this in mind, it would come as no real surprise to see the pressure mount on Boris Johnson to reconsider his stance on the issue. 

Contractor vote is there to be won

Of course, with a General Election looming, politicians are looking to garner support - and given the Conservative Party’s questionable treatment of contractors in recent years, you might argue that the vote of the independent workforce is there to be won. 

The Liberal Democrats look to have recognised this. Certainly, it will have done them no harm by also promising to “end retrospective tax changes like the Loan Charge brought in by the Conservatives so that individuals and firms are treated fairly” - also outlined in the Party’s Manifesto.

Of course, actions speak louder than words. And we will need to wait and see if the Liberal Democrats come into power. We can be certain of one thing at least, though. That by showing contractors they understand the issues most important to contractors, the Liberal Democrats will have won many new voters who feel let down by the Conservative Government and do not trust the Labour Party, that incidentally introduced the IR35 legislation in 2000.

With over 25 years’ experience, Qdos is a specialist contractor tax, IR35 and insurance adviser and we review on average, over 2000 contracts every month. Since 2000 and the introduction of the IR35 legislation, we have handled more than 1,600 IR35 enquiries, saving UK contractors over £35million in tax.