Is Liz Truss’s vow to review IR35 just an empty promise? 

IR35, Tax

Contractors and businesses “not holding their breath” as Prime Minister’s pledge to review IR35 is scorned

In her leadership campaign, Liz Truss pledged to review IR35 if she was to become the new leader of the Conservative Party and Prime Minister – a promise which understandably caught the attention of businesses impacted by the introduction of IR35 reform in both the public and private sectors. 

But while certain individuals welcomed the news that the now Prime Minister plans to focus on the IR35 legislation – which she criticised for “trying to treat the self-employed the same as big business” – very few have faith in Truss to examine the rules. 

In fact, the overwhelming majority (94%) of nearly 500 people polled by Qdos Contractor have taken the view that the new head of government’s vow to scrutinise IR35 is nothing more than an “empty promise”.

A further 1% said they weren’t “holding their breath” or see it as “electioneering” from the former Foreign Secretary. The remaining 5%, meanwhile, believe in Truss to deliver on this promise – which makes up just one of many that the Prime Minister made in the leadership race. 

 

Industry sceptical about yet another review 

It’s easy to see why people are so sceptical. IR35 has been reviewed multiple times, with numerous consultations and inquiries held into the inner workings of this controversial tax legislation – few of which have resulted in change. 

For instance, the House of Lords held two in-depth consultations on IR35, where they concluded that the IR35 rules are “riddled with problems, unfairnesses and unintended consequences”.

Despite this damning assessment of IR35 and recent reform – and recommendations to evaluate HMRC’s Check Employment Status for Tax tool (CEST), amongst others – the government has done very little in response. 

 

Mini-Budget may shed light on the details 

The feeling of having been here before is why another review of IR35 is unlikely to convince contractors, along with recruitment agencies and end-clients, that change will happen. 

This has been a message that our CEO, was keen to make ahead of the rapidly approaching mini-Budget – in which the newly appointed Chancellor, Kwasi Kwarteng – may reveal when the IR35 review will happen and what shape it will take. 

Seb Maley spoke to Computer Weekly on the issue: “The fact that the overwhelming majority of people have next to no faith in the new prime minister just to review IR35, let alone fix this legislation’s fundamental flaws, says it all. 

“Above all else, that so few people – whether contractors or businesses – believe that a review will be held at all provides food for thought for the new Prime Minister”.

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