[UK] HMRC’s IR35 Reforms Slated By House Of Lords Committee

29 APR 2020

We are all aware that the off-payroll rules / IR35 implementation in the private has been suspended until tax year 2021/22.  This was announced in a news story on the 18th of March 2020 “as part of the government’s Covid-19 economic response package”.

On the 27th of April 2020, the House of Lords Finance Bill Sub-Committee published a report entitled “Off-payroll working: treating people fairly”.  The purpose of the report is to look at the upcoming reforms and how they will work in practice.  We summarise some of the benefits and problems that the committee saw, quoting directly from the report:

  • It is right that everyone should pay their fair share of tax”, though, given the problems of the existing rules and the planned reforms
  • We therefore conclude that this framework is flawed
  • Re the delay to the implementation “We welcome this delay. It is right not to impose unnecessary burdens on business at such a difficult time”, although
  • Given the dysfunctionality of the existing system, we call on the Government to use the extra time to rethink fundamentally its approach to the legislation
  • The government “did not take full account of concerns raised by stakeholders
  • “It is likely that the off-payroll changes will cause widespread disruption”
  • “The Government should therefore take the opportunity afforded by the delay to analyse holistically the problems that we have uncovered”

Pretty hard-hitting comments and these are only taken from the summary at the front of the report.  In total, there were 40 conclusions and recommendations.  Given the widespread discontent and concern, we expected a government response that at least acknowledged them.

However, at the second reading of the Finance Bill 2020 late on the same day, Financial Secretary to the Treasury Jesse Norman said that “the Government remain fully committed to introducing” the reforms from the 6th of April 2021 and the Bill would be amended with the 2021 start date.  Although, he did say:

“The Government will use the 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”

Global Payroll Association Comment

It is encouraging that there will be this external research, though are the government so intent in pursuing this policy that it will be ignored as well?  With a government that is resolute in its determination to implement a policy that is flawed, perhaps it is time that people affected contact their MPs to express their concern. 

So, we point readers to the handy “find your MP” tool on parliament.uk!