Just a few short weeks ago, Kwazi Kwarteng declared that the IR35 off-payroll reform would be repealed, giving the contracting community a glimmer of hope that this would bring more opportunities to the market, and allow contractors to once again decide their own IR35 status. However, after much speculation following various U-turns, newly appointed Chancellor, Jeremy Hunt, has announced that the planned IR35 repeal will, in fact, no longer take place.
Andy Vessey, Head of Tax for Kingsbridge Contractor Insurance said, “This is a major blow for recruiters and contractors alike. Hunt has torn up virtually all the tax measures announced in the mini-Budget, as the government now dances to the tune of the markets. I applauded many of those tax announcements, none more so than this repeal.”
He continued, “SMEs are the backbone of the UK’s economy and the IR35 off-payroll reform is an obstacle to economic growth. Self-employed contractors feel they have been unfairly treated under the current rules, and many end clients have avoided engaging with contractors since its inception.” Andy concluded, “The current IR35 rules are likely to stay for the foreseeable future, so if businesses want to stay competitive, they should be embracing contractors, rather than ignoring this pool of talent, it will be far more beneficial in the long run”.
Having the right processes in place, and by partnering with the right businesses, the tax risks associated with IR35 can be significantly reduced. It is vital to have consistent, well thought out processes and good governance when it comes to compliance.
While it has certainly been top of the agenda for the last couple of years, IR35 should not be your only consideration when it comes to legislative compliance. Digital right to work, for example, snuck in under the radar last month, more or less unnoticed.
As a recruiter or end client, you should be ensuring that you have a robust and demonstrable compliance and onboarding process for workers, regardless of whether the engagement is permanent, a contract, or via an umbrella company. If you have this, then it means any upcoming changes can be slotted into place, rather than causing shock and upheaval for your business.
There has also been a lot in the news and social media over the last few weeks, with reference to the Criminal Finance Act, and how existing Status Determination Statements provided by an end client might be considered by HMRC after April 2023. It is all speculation at this point – nobody knows anything and the best thing to do right now is nothing.
As always, if you have any questions or need further support, our IR35 experts at Kingsbridge are here to help. We are committed to help contractors and recruiters cut through all the noise and offer practical advice to navigate these uncertain times.
