IR35 reforms likely to be delayed until 2020
The Chancellor’s Spring Statement has not provided updates on government proposals to the potential IR35 reforms which were speculated to impact private sector contractors next year.
Treasury spokeswoman revealed that the consultation to decide IR35’s future will be published no sooner than “the coming months.”
This statement offers limited company freelancers some of the certainty that they say Spring Statement lacked.
Although the Chancellor provided no certainty to contractors potentially affected by an extension of the rules to the private sector, the fact that a consultation has yet to be announced suggests that April 2019 now appears less likely to be a realistic implementation date – if the Government decides to go ahead.
Rumours had pointed towards the extension to the private sector commencing in April 2019, with a common expectation that an update regarding the progress of the IR35 consultation would be delivered within the Spring Statement.
Many expected the Spring Statement to contain the IR35 consultation and, even if it had, April 2020 would have been the more realistic start date anyway.
Talk from the government of ‘working with businesses to manage potential changes’ to IR35 in the private sector is raising concern that reform is a ‘done deal.’
But the timetable of the possible changes is still unknown – April 2020 now appears to be the favourite start date, unless the government consults and acts extremely rapidly.
Given time restrictions, a consultation would realistically need to be implemented within the coming weeks in order for there to be ample time for reasonable considerations to be made. It is therefore likely that, if there are any reforms, they would be delayed until at least 2020.
The government may be waiting for the Employment Status consultation to close in June or even this autumn Budget.
“If the latter,” said IR35 advisory Bauer & Cottrell co-founder Kate Cottrell, “then it is highly unlikely that any roll-out will happen until April 2020.”
And ‘later rather than sooner is no bad thing’ said Graham Jenner, director of contractor accountancy firm Jenner & Co.
“With many [freelance] contractors in the public sector being unfairly treated as within IR35; simply because the public sector bodies don’t have the resources to properly review all the contracts, it would be wise for the government to ensure that the rules in the public sector are being properly and fairly applied, before looking to introduce anything similar within the private sector,” he said.