Amendment from HMRC provides little comfort but some hope offered by Lords review.
An amendment to IR35 rules made by HMRC at the end of last week has been described as of “little comfort” for the self-employed sector.
HMRC’s amendment is that “the off-payroll working rules will only apply to payments made for services provided on or after 6 April 2020”. HMRC have stated the move was a response to the fact that during its review, it found that businesses were concerned about “what payments the rules apply to and from when”.
“As we approach the April deadline, HMRC are starting to realise just how difficult these rules will be for businesses to implement,” noted Andy Chamberlain, deputy director of Policy at IPSE (the Association of Independent Professionals and the Self-Employed), said: “Delaying the start date to when the work is actually performed, rather than paid for, is a sensible move, but it doesn’t address the fatal flaws in the legislation itself.
“This minor amendment will be little comfort, therefore, to the many contractors already being laid off by companies who are panicking about the approaching changes,” he added.
James Poyser, CEO of online accountants inniAccounts and founder of offpayroll.org.uk went further on the impact of this change: “Before today, contractors needed payments made by 5th April, as most payment runs on 28th of month. So the last run is 28th March – work is paid one month in arrears, so that’s invoices for end of February.
“Generally most contracts require one month’s notice, which was end of January so it’s too late for many contractors who’ve already ‘left the building’.
“For those left, it grants clients just three more weeks -– contactors need to give notice at the end of February to get all work done by end of March.
So it’s fair to say it adds to the mess. HMRC probably know it’s flawed, but are trying to take measures to resolve the crisis. Sadly as many of the comments from people effected on offpayroll.org.uk show its too little, too late. We need a massive reset on it all. Livelihoods, lives and UK Plc is at huge risk if we don’t take action now.”
At the same time the House of Lords Select Committee has launched an inquiry into the draft Finance Bill 2019-20, a move which has been welcomed by APSCo and others.
On the announcement, Tania Bowers, Legal Counsel at APSCo said: “We at APSCo appreciate the fact that this inquiry concentrates on the proposed extension to off-payroll working rules. We are also impressed by the scope of the questions posed by the Finance Bill Sub-Committee and its excellent grasp of the key issues that that these reforms have raised. The call for written evidence seems to recognise that changes to IR35 in the public sector were not as straightforward as HMRC suggests, and we are encouraged by the group’s desire to learn more about the real life experiences of individuals and organisations affected, as well as the broader impact on the labour market.”
She added: “While this inquiry and HMRC’s own review into reforms are technically separate exercises, the fact that they are running concurrently is indicative of the scale of unease around the incoming changes.”
A protest against the IR35 changes has been scheduled for 12th February outside parliament at 11am.