Rishi Sunak — the new Chancellor of the Exchequer — has decided to make improvements in the IR35 framework that will allow a smooth transition from the 2000 legislation to the 2020 off-payroll rules.
The new Chancellor said that the April 6th IR35 reform is “going to mean a change for some people.” He had said that “nothing has changed in the law,” and he later acknowledged that the IR35 status will be determined by companies.
Mr. Sunak has promised that HMRC will not be exacting during the first year of implementation of the plan. The implied ‘soft-landing’ will give more time for people to adjust to the new rules. However, many experts have vehemently condemned Mr. Sunak’s comments given in Birmingham during a Q&A session this weekend.
Condemnation from Experts
Contractor Accountant James Poyser criticised the government’s plan saying that the soft landing is pointless. He stated that the government should delay if it’s worried about the implementation of IR35.
Meanwhile, an IT contractor commenting on LinkedIn said that it’s not going to be a soft landing for companies that will find it difficult to get things done after March.
Other experts think that Mr. Sunak’s “tweaks and improvements” that IR35 Reform Review will reveal shortly will not change the fundamental issues regarding IR35 reforms.
A former tax inspector had said that if a career politician is constantly worried about where the next contract will come from, he can better understand the problems related to determining mutuality, sufficient, control, and being in business on own account.
The new chancellor was criticised for his inexperience and lack of conviction in dealing with the issues. His officials have obviously duped him regarding the off-payroll working rules.
Government Stance on IR35
A spokesman for the Treasury had said that the HMRC wants to support businesses in the implementation of the new rules. The spokesperson did not provide details regarding improvements that will soon be unveiled by the IR35 Review.
The latest comments of Mr. Sunak imply that nothing has changed in the IR35 reform rules and we always had laws that required people to pay tax depending on the type of work. But they were not followed. IR35 reform will change the balance allowing companies to determine the status of workers.
Mr. Sunak has said that it’s not fair for employed people that some are paying less tax that pays for social care, NHS, and other government expenses. He says that IR35 will correct the unfairness leading to equitable taxes. The government will publish a review that will explain how the laws should be implemented to ensure a seamless transition to the new rules.