On Monday 7th December, Jesse Norman, Financial Secretary to the Treasury, appeared before the House of Lords select committee, on the issue of the new Off Payroll Rules. The meeting referred to the “unintended widening” of the definition of intermediary, but perhaps also gave a clearer indication that the rules will not be postponed further.
The Off Payroll Rules, as contained within Chapter 10 of ITEPA 2003, are intended to be extended to supplies to medium and large clients with effect from 6th April 2021. The original implementation date had been April 2020, but the rules were postponed for 1 year due to the coronavirus pandemic. With the pandemic ongoing, difficult economic conditions, other schemes and concessions extended, interested parties have lobbied for a further delay. Many in the industry and indeed hirers, are reluctant to act and prepare for the new rules, still hopeful of a postponement. However, HMRC and the Treasury have been consistent in their message that the rules will apply from April 2021, also backed up by Mr Norman’s appearance before the House of Lords committee.
The government has had multiple opportunities to postpone, whether this be in the Winter Plan, challenge in the House of Commons, or in the statements intended to address the “unintended widening” of the definition of an intermediary in the final version of the legislation. The House of Lords committee was quite critical suggesting that legislation which has a problem should be withdrawn, redrafted and then presented once more to parliament, a suggestion that was dismissed by Mr Norman, who referred to the matter as a technical error.
HMRC is pressing ahead with its education campaign, legislation is in place and there is no evidence to suggest that there will be a postponement. Economic circumstances may be difficult, however, business support schemes and dealing with the pandemic have been at a huge, albeit necessary, cost to the public purse. Costs have to be recovered and the books balanced. IR35 is anticipated to bring in large revenues for the government, so any postponement now would require a significant U-turn.
Whilst we can all hope for a reprieve, hirers and recruiters should be getting ready for April 2021 by ensuring an understanding of the new rules, communicating with hirers, planning for alternative engagement options and, where gross payment will continue, ensuring that there is the strongest possible contractual arrangements in place to support the status. Contact Lawspeed on 01273 236 236 or firstname.lastname@example.org for assistance with all aspects of IR35, including robust contracts for both ’outside IR35’ arrangements and alternative engagement options.