With the planned extension of the IR35 off-payroll rules to the private sector due to go ahead in April 2020, a campaign to stop the damaging reforms from going ahead has been launched this week.
Stop the Off-Payroll IR35 tax campaign
The newly launched campaign, headed up by ContractorCalculator, and supported by a growing number of organisations such as ours, has two key aims:
Alongside these main objectives, the campaign wants to ensure employers pay any employers’ NIC liabilities owed by contractors deemed to be caught by IR35, and that this significant cost is not borne by contract workers.
And significantly, if a contractor’s assignment is found to be ‘inside IR35’, then that contractor should be given full employment rights. This aim, in particular, is fundamental to the injustice that is IR35.
The Treasury wants to prevent limited company workers who provide professional services from gaining any ‘tax advantage’ over traditional workers. However, if you are deemed to be caught by IR35, not only do you have to pay full PAYE taxes, but you will receive none of the employment rights enjoyed by traditional workers.
Unsurprisingly, the campaign also seeks the permanent removal of CEST (the flawed online employment status tool created by HMRC).
A long history of anti-contractor legislation
Both James Leckie, who runs his site, and Dave Chaplin, from ContractorCalculator, covered the original implementation of IR35 back in 2000, and since then, successive governments have enacted a series of tax laws aimed squarely at limited company contractors – including the dividend tax hike of 2016, changes the Flat Rate VAT scheme, the Managed Service Company legislation and the Loan Charge.
This latest piece of legislation, however, is particularly threatening, as the onus of IR35 compliance now rests with clients rather than contractors themselves. Clients, being risk-averse, may decide to place entire teams of contractors within IR35, rather than facing hefty liabilities should they may ‘incorrect’ employment status decisions.
With less than a year to go before the planned go-live date, we asked Dave Chaplin a few questions about the private sector extension, and the campaign itself…
Hasn’t the extension already been planned for April 2020?
“The Government has signalled its intention for something to be brought in for April 2020, but nothing is law yet. The consultation closes on 28th May, then draft legislation will be proposed in July.
“Then we won’t know what will happen until the Autumn Statement in November. If we can stop the legislation going into the next Finance Act then it won’t be law. Given the damage, it will cause, and with Brexit on the agenda, and with further changes to employment status planned in the near future, it makes no sense to do this now.”
Do you think the Government will change its mind?
“Yes. There is every chance of that. This is not a popular measure at all amongst Conservative MPs, because it is a very anti-business move. We are likely to have a new PM this summer, who may choose to cancel or postpone this, and a change of Chancellor could also result in it not going ahead.”
What needs to happen for the campaign to succeed?
“Simple. Contractors and businesses need to go and visit their MPs and explain the damaging effect this will have on their lives and businesses. If they do that, we will succeed. If they don’t, we won’t. There is nothing I, nor any other trade group, can do individually to stop this. It’s all down to the constituents.”
Find out more
You can find out more about the campaign here. The team has developed some briefing material for contractors to use, which you can get by emailing your MP’s name to email@example.com.