Liz Truss Promised to Review IR35 Rules
Before becoming the PM, Liz Truss pledged to review IR35 rules and the impact off-payroll working policies have had. With Liz Truss now in place as the UK’s new prime minister, contractors and employers are waiting for her to review the IR35 Rules.
The PM referenced that self-employed workers don’t get the same benefits as big businesses. And the tax system should reflect that more.
But is there anything in her promise? Or was it just a tactic to appeal to thousands of workers who have been negatively affected by the rules?
While being sceptical, the contractor sector is trying to come up with ways to make it harder for Truss to wiggle out of her pledge.
Earlier this year, the government did not even try to reform the employment status, noting a lack of agreement from stakeholders. So, it seems, that nobody likes the current system, yet no one can agree on how to change it.
Little hope in the contractor sector
A poll of 476 contractors by Qdos, showed that 94% believe Truss’ pledge to review IR35 is an empty promise. Yet some contractors are optimistic. They think that Liz Truss wishes to review legislation in order to unleash a ‘small business and self-employed revolution’. In order to jumpstart the economy.
If not actions, the contractor sector wants some answers to how IR35 went wrong. For example, a High Speed 2 (HS2) – a government-funded arm of the Department for Transport fell foul of IR35. HS2 set aside £9.5m for a tax bill, just in case HMRC finds out mistakes were made following the IR35 reform in the public sector in 2017.
To see a different outcome, a truly independent review should be held with significant evidence. Otherwise, HMRC will end up with the same conclusion that everything is working fine.
Many contractors in the sector agree that it is time to change tactics. And that IR35 is restrictive to small businesses and freelancers. What’s more, they think it is not right that self-employed people are forced into employment without having rights or benefits, but are still responsible for paying all the same employment taxes.
IR35 review to win back support?
According to ComputerWeekly.com, Seb Maley, CEO of Qdos, said that a fair review of the IR35 rules would go a long way to help Truss and the Conservative Party win back the support of the contractors.
It seems that the contracting community agrees the IR35 rules need reviewing. At the same time, they are sceptical if it is going to happen. The contractors believe if the review happens, it is an opportunity for the government to fix a system that was never right in the first place.
It is more likely that the review will be used to tweak the rules and make minor changes to try to placate contractors. But it is doubtful that these changes will be enough to quell the anger of the contractor community.
While there are both pessimists and optimists in the contractor sector, one thing is certain. It will take time for the new PM to review IR35. In the meantime, contractors must continue to point out both the reformed legislation’s failings and its unintended consequences. Only then will there be any hope for change.
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