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House of Lords committee reveals IR35 concerns

Chris Biggs, MD, Theta Financial Reporting offers a comment into the off-payroll working rules and how this will impact contractors 

On 22 April, The House of Lords committee looking at the proposed extension of IR35 regulations to the private sector , wrote to the Treasury with a list of concerns about the proposed reforms. The extension to the off-payroll working rules, due to come in on 6 April, was postponed last month due to increased business uncertainty caused by the coronavirus pandemic. The legislation is now expected to take effect on 6 April 2021.

Members of the House of Lords finance bill sub-committee, led by Lord Forsyth of Drumlean, had been conducting a review into the legislation and have now produced their recommendations and set out a number of questions for the Treasury to answer. The committee’s concerns include the cost to businesses in preparing for the reforms, the potential for contractors to lose business or face declining rates, and whether stringent limits on the use of contractors could hamper the labour market as employers try to flex-up work and rebuild business once the coronavirus crisis is over.

Chris Biggs commented on the impact of this delay for contractors working in professional services. 

"These concerns from the House of Lords finance bill sub-committee raise questions for both contractors and companies and while the government is holding firm on the implementation of the off-payroll working reforms, it may be too late for some companies. Before April this year, many businesses had already gone to considerable effort to become IR35 compliant by 1 April 2020, and these are unlikely to be reversed and then implemented at a later date. 

The concerns that contractors may struggle to regain clients in mid-2020 is a real worry for thousands of people and the government needs to address this. However, there may be more opportunities than ever before for contractors after this period, and to realise the potential in the economy, as much as possible should be done to help these people and companies."


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