Chancellor announces IR35 review in pre-election pledge

Conservatives address IR35 days before the general election

The Chancellor of the Exchequer revealed over the weekend that the Conservative Party will review IR35 reform as part of its plans to explore how the Government can better support the UK’s 5million strong self-employed workforce.

Speaking on BBC Radio 4’s Money Box, Sajid Javid took the opportunity to discuss the IR35 legislation. He stated: “One thing in particular that I want to look at again are the proposed changes to IR35. I want to make sure the proposed changes are right to take forward.”

Mr Javid then explained he believes it “makes sense to include the proposed IR35 changes” in the Government’s Manifesto promise to review how the party can back entrepreneurs.

IR35 addressed by major political parties

These comments came less than a week after both the Liberal Democrats and the Scottish National Party explained in their respective manifestos that they would review IR35. Meanwhile, Labour MP, Bill Esterton, also made a similar promise at a small business event and reiterated this via Twitter, before apparently backtracking and deleting his Tweet.

That IR35 is on the radar of the major political parties is welcome news, despite the Labour Party’s hesitance to commit to a review of IR35 reform. Across the contractor sector, this development has been applauded by most independent professionals, thousands of whom have been unfairly placed inside the IR35 legislation as a result of public sector changes in 2017.

IR35 review mustn’t be “lip service”

While many contractors and IR35 specialists have welcomed a potential review, eyebrows have been raised due to the fact the Conservative Party has addressed the issue with just days to go until contractors cast their General Election votes on 12th December.

You might have noticed, the Conservative Party Manifesto didn’t reference IR35 specifically. The closest it got to referencing the legislation was the commitment it made to launching “a review to explore how we can better support the self-employed”, in which ways to make “the tax system easier to navigate” would be considered.

With this in mind, it’s important that Conservatives haven’t announced this because of the support the Liberal Democrats, in particular, have gained from contractors following the release of Jo Swinson’s contractor-friendly Manifesto.

As Qdos CEO, Seb Maley, explained to the FT Adviser: “Any review must be genuine and not lip service simply to win the votes of independent workers, who could be crucial in the outcome of the General Election.”

Scepticism remains

Given it was the Conservative Party that introduced IR35 reform in the public sector two years ago, you could forgive contractors for any scepticism they might hold. After all, promising to review IR35 changes is one thing. Reversing the decision to introduce needless reform to this complex legislation is another thing altogether.

Therefore, it’s no surprise that the phrase ‘actions speak louder than words’ has been circulated in reference to promises made not only by the Conservatives but the Liberal Democrats and the SNP too.

Preparations must continue 

Contractors, recruiters and end-clients are listening closely to the latest twist in the IR35 story, no doubt asking themselves what an IR35 review means. Should they pin their hopes on a last-minute U-turn and the scrapping of IR35 changes? Or must these parties work off the premise that until told otherwise, IR35 reform will go ahead and therefore preparations must continue?

As Qdos CEO, Seb Maley, explained in the Financial Times, even if a review was to materialise, it’s important that contractors and private sector firms ensure they are ready to manage reform well before 6th April - the date on which medium and large companies will become responsible for administering the IR35 status of the contractors they engage.

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.