No ‘IR35’ in Spring Statement 2018 -Private sector consultation expected “in the coming months”

In his Spring Statement speech, the Chancellor Hammond decided not to mention IR35 in private sector.

“Predictably, our sector has been left in the dark over potential IR35 changes,” says Seb Maley, chief executive of IR35 advisory Qdos Contractor.

So, the private sector must wait a little longer to learn the fate of IR35.

Referring to a consultation on IR35, promised at 2017’s Autumn Budget, Mr Maley added: “The government must realise that the sooner they offer clarity over the situation, the better.”

Even though there was no mention of IR35 in Spring Statement, the Government’s written statement published shortly after suggests that an extension of the public sector off payroll rules to the private sector is still on the cards.

Although the introduction of the off payroll rules into the public sector in April 2017 has been controversial, this Government appears to be determined to remove the “significant tax advantages” it claims limited company contractors enjoy.

An extension of the existing rules to the much larger private sector would appear to be the next logical step.

Perhaps it is not a surprise, because only late last month the government was still “evaluating the impact of the public sector reform” – which is the likely model for private sector reform.

Mr Maley also said “Should the government carry out a fair and considered review into last year’s public sector reform, they will realise that further reform is neither wise nor necessary”. He also issued an alert: “[And] no news [today on IR35] isn’t necessarily good news. To avoid mistakes made following IR35 changes in the public sector, it’s vital the private sector is given a fair amount of time to prepare”.

The FCSA disagrees, saying that “no mention” by the chancellor of future IR35 reform hopefully “shows that the government has listened to…[the] many concerns and the impact the changes have had on the public sector”.

Regardless of whether its omission has positive or negative implications, IR35 expert Kate Cottrell is disappointed. “The fact that the consultation has not been published today is incredibly frustrating not least because we could then get a better idea of timescales”.

She also said: “It could of course be published tomorrow so there is absolutely no room for complacency at this stage.

“[So] everyone potentially affected needs to take some action now. Contractors should be raising IR35 with agencies and clients, and agencies and clients need to understand what it means for them and their businesses now.”

The former tax inspector is not alone in believing that the absence of the IR35 consultation at today’s Spring Statement does not mean that it is no longer imminent.

Ed Molyneux, boss of FreeAgent explained: “It’s disappointing, although not surprising, that the chancellor chose not to make any significant announcements in the Spring Statement.

“I think it was a wasted opportunity to provide some much-needed clarity about many of the big issues facing freelancers and micro-businesses — and to properly explain what progress has been made so far in tackling them.”

However, according to written ministerial statements the contractor sector is not going to have to pour over the IR35 consultation momentarily.

In fact, a Treasury spokeswoman revealed that the consultation to decide IR35’s future will be published no sooner than “the coming months.”

The new Budget timetable, published in December 2017, outlines the steps that new tax policies have to take from initial announcement to inclusion in the next Finance Bill

Graham Jenner, boss of accountancy firm Jenner & Co reflected: “IR35 [changing] within the private sector….is unlikely to go away anytime soon.

“[But] it is to be hoped that the problems encountered with implementing the changes in the public sector have made the government think carefully about any changes within the private sector.”