Treasury reiterates IR35 reform will be added to the Finance Bill and enforced in 2021
Private sector businesses must continue preparing for IR35 reform after the Government said it remains committed to rolling out the changes on 6th April 2021, despite the arrival of a conclusive House of Lords report that advises against it.
Having already delayed the introduction of changes to the off-payroll working rules by one year due to the COVID-19 crisis, news that IR35 reform would not appear on the Finance Bill led to speculation that private sector reform would be postponed yet again or shelved indefinitely.
However, earlier this week the Financial Secretary to the Treasury ruled this out when conducting the second reading of the Bill. Quashing these rumours, Jesse Norman confirmed that IR35 reform will be enforced next year, with the legislation to be included in the Finance Bill soon.
Speaking in Parliament, Mr Norman said:
“The Government will introduce an amendment to the Bill in due course to legislate for a new commencement date of 6th April 2021. The Government will use this additional time to commission further external research into the long-term effects of the reforms in the public sector, with the intention that that research will be available before the reforms come into effect in the private sector in April 2021.”
That Mr Norman made this clear on the day the Lords published a damning report into IR35 has been met with criticism. The Lords urged the Government to rethink the legislation, make “wholesale reform” to IR35 and decide on whether to extend changes to the private sector in six months.
While the report may result in some amendments, along with a review of public sector reform, as things stand, the Lords’ advice looks to have been all but ignored – the Government has reaffirmed its commitment to enforcing these changes, which will see medium and large private sector firms become responsible for administering the IR35 status of contractors. As part of this reform, the IR35 liability, currently held by the contractor, will be transferred to the fee-paying party in the supply chain, which is often the recruitment agency that places the worker.
The feeling that nothing will stop the Government from delivering the reform – a similar version of which has been in place in the public sector since 2017 – sends a strong message to hiring organisations and recruiters: IR35 preparations must continue.
With it confirmed that IR35 reform will be added to the Finance Bill and that changes will be rolled out next April, it would be unwise for businesses to pin their hopes on another last-minute U-turn.
For more information on how to prepare for reform to the off-payroll working rules and to hear how Qdos can help to ensure IR35 compliance and protect your business from the legislation’s risks, please call us on 0116 478 3390 or email firstname.lastname@example.org.