Labour politician says party will “consult” on IR35

Will a Labour government review IR35?

The Labour Party has made a second promise to review IR35 reform in the space of a fortnight, with the Shadow Secretary for Business, Rebecca Long-Bailey, pledging to “consult” on incoming changes to the legislation.

After Labour MP Bill Esterson told the audience at IPSE’s General Election Hustings recently that he “absolutely can’t see it (IR35 reform) rolled out into the private sector the way things are at the moment,” before confirming this in a since-deleted Tweet, Rebecca Long-Bailey was tasked with clarifying the Party’s stance on IR35 in a radio interview.

Party asked to clarify IR35 position

Discussing the Labour Party’s view of IR35 on BBC Radio 5 Live, Long-Bailey explained the importance of having a “system in place that’s fair for the self-employed and IR35 certainly doesn’t work for them.” Then, when pressed on the issue by the interviewer, the Shadow Secretary for Business said: “We don’t think IR35 is appropriate.”

Rebecca Long-Bailey also stated that a Labour Government would “work with the self-employed themselves and the organisations representing them, such as the FSB, for example, to look at a system that’s fair.” She then stated the “system” in reference to IR35 reform, “is certainly not fair and it’s causing a lot of anguish to those who are self-employed.”

The full transcript, published on Contractor UK, suggests that a Labour Government would review the impact of IR35 reform, which will hand medium and large private sector firms the responsibility for determining the IR35 status of contractors. The IR35 liability will also be transferred to the fee-paying party in the supply chain, which is often the recruitment agency. As you’ll no doubt be aware, a similar version of these changes was enforced in the public sector in 2017.

Still no official Labour statement 

However, at the time of writing, since Long-Bailey’s interview, the Labour Party has not officially confirmed that an IR35 review would take place, unlike the Conservatives, the Liberal Democrats and the Scottish National Party. This hesitancy has led a number of IR35 experts, including Qdos CEO, Seb Maley, to warn contractors against taking these comments as gospel.

Due to the fact it was the Labour Party that introduced the legislation nearly twenty years ago and there is no mention of IR35 in its manifesto nor its ‘20 pledges for Small Businesses’ document, IR35 specialists are advising contractors and private sector firms to continue preparing for the arrival of changes on 6th April 2020 regardless.

Given this glaring omission in Labour’s manifesto has not gone unnoticed by contractors, with the General Election just days away, time is running out for the Labour Party to end mounting speculation regarding its plans for IR35.

Take any IR35 review with a pinch of salt

Even if Labour was to release a statement confirming that they will join the other major political parties in committing to an IR35 review, contractors and the businesses affected must work off the basis that reform will be introduced.

After all, the conclusions from the most recent IR35 consultation, published early in 2019, suggests the existing Government is of the opinion that public sector reform - which at the time had raised £550m - has been a huge success.

While the Labour Party certainly has a different view of the tax system to the Conservative Party, serious question marks still remain over whether Jeremy Corbyn would firstly scrap incoming reform and do it before the rapidly approaching roll-out of these controversial changes.

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.