Government announces IR35 review – but don’t wait for final legislation to act

Last week, the Government announced they are launching a review into the implementation of IR35 reforms in the private sector, a move that will no doubt have many contractors excited at the thought of delays to, or even the cancellation of, the changes. However, before you and your clients go popping open the champagne, we recommend taking a look at the wording of the announcement and continuing to prepare for the incoming reforms as if nothing has changed.

Announcing the review, Financial Secretary to the Treasury Jesse Norman said: “We recognize that concerns have been raised about the forthcoming reforms to the off-payroll working rules. The purpose of this consultation is to make sure that the implementation of these changes in April is as smooth as possible.”

It appears, then, that the Government is still very much committed to the reforms launching 6th April and that this review is into how they will be implemented, rather than into the reforms themselves.

Kingsbridge’s IR35 advice

At Kingsbridge, we’ve been watching the IR35 reforms closely. Our Legal Manager, Nicola Hayman, had this to say on the review announcement:

“While we welcome the fact that HMRC has recognized a need to take another look at how these changes will be implemented, there is no escaping the fact that it is now too late for a thorough review of the proposed reforms.

Furthermore, the Government’s admission that the purpose of this consultation is to make ‘sure that the implementation of these changes in April is as smooth as possible’ confirms that any delay is extremely unlikely.

With this in mind, we are urging the businesses that we partner with to continue to prepare for incoming reforms – there simply isn’t time to wait for the outcome of the review and final legislation.”

In short, don’t wait to see if this review changes anything as it’s highly unlikely that it will. Just carry on making preparations in time for 6th April to ensure a smooth transition for yourself and your clients.

What will the impact of IR35 be?

At Kingsbridge, we’re hopeful that the effects of the IR35 reforms will be minimal and it’s up to recruiters to communicate this to their clients so that they don’t miss out on the amazing talent pool of contractors out there. As Hayman puts it:

“Contractors represent a vibrant and increasingly important part of the UK economy, and this point further emphasizes the fact that there is no reason why companies should be concerned about continuing to engage with this talent pool after April.

Even when using HMRC’s own calculations, the vast majority of PSC contractors are genuinely self-employed – and recruiters should communicate this fact to any clients who may be spooked by the recent flurry of blanket bans so that they don’t consider implementing their own veto on contractors.

In our experience, good recruiters are happy to place genuine contractors outside of IR35 and will work with employers to determine the status of these individuals, helping the client to overcome reasonable care requirements.”

For more information, please email IR35@kingsbridge.co.uk.