2021 in review: what were the top news stories for contractors?
It’s always good to look back on the year to see how far we’ve come and while 2021 wasn’t quite as action-packed as 2020, there were still plenty of stories affecting contractors, from starting the year in lockdown to the launch of the new IR35 legislation. We’ve pulled together a round-up of the year with some of the key contractor headlines of the year.
Back into lockdown
2021 didn’t start in the best possible way. The new year champagne bottles were barely in the recycling bill when the Prime Minister announced that we were returning to lockdown thanks to the increasing spread of the Delta variant of COVID-19. The lockdown wasn’t quite as strict as the first 2020 lockdown and included some reprieves such as childcare bubbles, but it was a disappointing way to start the year.
Supreme Court rules in favour of FCA over Business Interruption insurance case
Better news in January was that the Supreme Court ruled in favour of the FCA – and subsequently, small businesses across the UK – in a Business Interruption insurance test case. It meant that the insurers involved were forced to pay out an outstanding £1.2 billion in CBI claims. This meant thousands of Business Interuption policyholders would receive pay-outs for coronavirus-related Business Interruption claims. This was great news for lots of small businesses and contractors around the UK.
In early March, Chancellor Rishi Sunak announced the Spring Budget. The focus was very heavily on the pandemic. IR35 didn’t get a mention, but there were some positives for contractors, with the newly self-employed becoming eligible for support. He also extended the furlough scheme and SEISS scheme to cover until July, when lockdown was expected to have eased.
The IR35 reforms launched
After being delayed for a year by the COVID-19 pandemic, the IR35 private sector reforms finally launched on 6th April 2021. Despite rumours of further delays, the reforms came in as expected. The changes moved the responsibility (in most cases) for determining a contractor’s IR35 status to their end client, and the tax liability to their fee payer, bringing it in line with the public sector, much to the chagrin of contractors and businesses.
Several famous faces have found themselves in HMRC’s sights regarding IR35 during 2021, but Gary Lineker is probably one of the most well-known. He was targeted by HMRC over a £4.9 million tax bill and was ruled as inside IR35 at the First-Tier Tribunal. This particular hearing was an application by Lineker to change his grounds of appeal, so it was clear this dispute would continue to rumble on.
2021’s lockdown was eased gradually, with restrictions being dropped in stages. The second of these came in May and life began to look a little more like normal.
An IT contractor, Robert Lee, lost a big IR35 case to HMRC, based on contracts with Nationwide Building Society under his limited company. He reportedly owed £70,000 in taxes and was appealing the First-Tier Tribunal decision. The Upper-Tier Tribunal also found him inside IR35 based on all three major pillars of self-employment.
The Independent Workers’ Union of GB (IWGB) had been embroiled in a case since 2017 to have Deliveroo couriers deemed workers, so that they would have a right to unionise and bargain for better working conditions. In June 2021, the Court of Appeal upheld the previous decisions that they are self-employed. This is the fourth time this decision had been reached.
It was delayed by a few weeks, but all legally-enforced lockdown restrictions in England ended in July 2021. While some places, such as public transport, still requested the use of face-masks, for instance, it was no longer a legal requirement. It was a time of great joy for many, but also a time for anxiety and whether it was 100% the right decision remains to be seen (at the time of writing, some restrictions have been reimposed to tackle the Omicron variant) but it allowed people to have a somewhat normal summer.
It emerged over the course of 2021 that working from home had fuelled a rise in cyber-crime, with incidences of scams such as phishing, ransomware and malware growing from 5,000 per week in February 2020, to more than 200,000 per week by April 2021. Contractors and SMEs were very much included in this data and were encouraged to be vigilant.
George Mantides, a contractor urologist, challenged HMRC to an Upper-Tier Tribunal after receiving a split decision on his IR35 status at the First-Tier Tribunal. It was decided that his contracts with Royal Berkshire Hospital and Medway Maritime Hospital were inside and outside IR35 respectively.
Late in October, Chancellor Rishi Sunak delivered the Autumn Budget, announcing that it paved the way for a “post-COVID era.” There was no mention of IR35, but there was lots of news to affect contractors, including predictions that inflation would average 4% in 2022, and major investment in growth plus increased spending.
There were always bound to be some cases of people abusing the government’s coronavirus support schemes and the BBL scheme was no different. In November, we reported that in recent months, no less than three businesses had been targeted by the Insolvency Service, with company directors disqualified over wrongfully applying for Bounce Back Loans.
2021’s not been the best year for celebrities fighting IR35 cases. In this instance, it was former Sky Sports presenter, Dave Clark, who lost an IR35 appeal carrying a tax liability of more than £281,000. Unfortunately, he was found wanting in all three of the key tests of self-employment. We expect to see more Sky presenters targeted by HMRC as the Treasury seems to think it’s on to a winner here.
Hopefully, 2022 will bring us some cheerier headlines for contractors in the coming months but, for now, all that’s left is for us to wish all of Kingsbridge’s customers and partners a happy and healthy new year.