Lords call for ‘indefinite delay’ to IR35 plan

A House of Lords committee is urging the government to delay plans to roll out the IR35 tax legislation, which is scheduled to come into effect on 6 April 2021.

Sent on 22 April 2020, the letter welcomed the government’s decision to push the reforms into next year, but argued that they should be delayed indefinitely until concerns can be addressed.

The Finance Bill Sub-Committee said issues such as non-compliant umbrella companies, the reliability of the Check Employment Status for Tax (CEST) tool, and the success of the 2017 introduction of IR35 reforms to the public sector.

“The Committee has received a significant amount of evidence about the administrative burden that the off-payroll working rules will place on business,” the letter said. “We also heard that preparing for the rules will impose substantial start-up and running costs. Witnesses reported that the combined cost for just six businesses has already been as much as £3 million.

“We were told that the reforms might result in contractors leaving freelancing, losing business, and facing a decline in pay rates, as clients pass down the additional costs that they would incur. And since the beginning of the COVID-19 crisis, stakeholders have written to us that of their fears that such losses will be permanent.”

Contractors giving evidence to the Committee said that the coronavirus pandemic meant that they are unlikely to secure any business in the coming months.

The government has been asked to respond within 10 working days.


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