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MPs to Vote on Kicking IR35 Reform into 2024

MPs to Vote on Kicking IR35 Reform into 2024

Tomorrow, MPs will vote on a proposed amendment to the 2019-21 Finance Bill that would delay the implementation of IR35 reform in the private sector until 2023/24. The amendment was tabled by Conservative MP David Davis, and included within the House of Commons order paper for Tuesday 19 May. It follows a twelve-month delay to the IR35 reforms following the outbreak of coronavirus.

A highly critical report resulting from the House of Lords inquiry into IR35 reform also called for a delay in favour of finding a fairer alternative. Speaking last week, Mr Davis alluded to the peer’s conclusion that the reforms were fundamentally flawed, commenting: “The potential impact of the rules on the wider labour market, particularly the gig economy, has been overlooked. The government must devote time to analysing all of this. A wholesale reform of IR35 is required.”

In fact, the Lords inquiry highlighted no fewer than 29 difficulties with the off-payroll rules. Amongst the most damning of these was that they effectively leave many contractors as zero rights employees. Despite calls from the House of Lords for an overhaul of the damaging legislation, the off-payroll legislation was notably included in the second reading of the Finance Bill last month, while government made a terse concession to conduct yet another review before implementation in April 2021.

As a former Brexit Secretary and a high profile supporter of the UK’s self-employed, Mr Davis’s ‘Ways and Means’ resolution carries some weight. However, for the amendment to be included, a house majority of at least 40 Tory MPs is needed to vote in favour. The passing of the amendment also depends on votes cast by non-conservative MPs and the overall turn out of voters on the day.

The off-payroll reforms have encountered significant opposition from campaigners. The Stop the Off-Payroll Tax campaign has received cross-party support in parliament, with issues such as unlawful blanket rulings condemned by a number of prominent MPs in commons. The reforms also played a key part in the general election, when all major parties pledged to review the legislation.

However, the subsequent review failed to address critical issues with the legislation, as the government sought to push through the reforms. The investigation was neither independently conducted, nor did it take adequate time to collate and reflect on the evidence. There’s some scepticism among stakeholders that the government’s stance will change, especially as there’s now a call to expand the amendment so that, if passed, it would suspend the forerunner to the 2021 reforms – the public sector IR35 rules of 2017.

Dr Iain Campbell, chair of the SEA and general secretary of the IHPA, said that although they were grateful to Mr. Davies for proposing the amendment, the resolution “significantly neglects to propose the urgent suspension of the public sector IR35 reforms pending a full inquiry.” He argues that failing to suspend the public sector Chapter 10 reforms for the same period (2023-24) is a slap in the face to front line health workers putting their lives on the line for us during this COVID-19 crisis.

This content has been supplied by IR35 Guru

Further arguments against the off-payroll rules include the misinterpretation of employment law by HMRC which continues to result in significant defeats against the Treasury at tribunal. If you’ve been affected by the off-payroll reforms or if you’re unsure about your employment status, Contracting Scout can help you make sense of your options. To talk to a member of our team, call: 0203 603 1878

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