The cancellation of the Autumn Budget on 6th November has been confirmed by the Chancellor given that we now have a general election set for 12th December. Does this mean a delay to the IR35 legislation? Probably not.
Whilst initial speculation of the budget cancellation may have seen businesses and contractors alike get out the champagne and put down their project plans, I would suggest exercising caution - despite the backlash, it’s clear the government does want to make these changes.
Even with professional bodies and industry bodies calling for a delay to 2021 at the earliest given the uncertainty the cancellation to the Budget has brought, the legislation [to implement the changes to IR35] is drafted, and there needs to be some sort of finance bill so the government can still set rates and collect taxes and in order to comply with the Budget Responsibility and National Audit Act. The measure is in the system, and I’m not sure that those in the system want to throw it out.
This is supported with a Treasury spokesman stating “We remain committed to introducing the IR35 rules in April 2020. This will ensure that tax that was always due is paid.”
In addition, so much work and organisational policy has already been put into the planned legislation, with the big banks announcing blanket bans on PSCs for example, that a delay really won’t make much difference as I would expect that these bigger businesses will stick to their strategic approach from April 2020, irrespective of whether the changes go ahead or not.
Furthermore, the fact the banks are choosing to go down this route will act as encouragement for the government that the introduction of the IR35 off-payroll reform continues to be the answer to some of their tax gap problems.
At the very least, if there is any delay, it would be welcome for those businesses who have yet to make a start and will hopefully mean more time to get things right.
However, those who are already underway with their projects or have yet to start should not delay their preparation any further in the hope the rules will be pushed out beyond April 2020. This in itself may well lead to a last-minute scramble and inevitably see businesses take knee-jerk decisions.
If you would like any support with your IR35 off-payroll reform project or would like to discuss the next steps for your business, whether you are a contractor, fee-payer or end-user then please do not hesitate to get in touch with Charlotte.Edwards@aab.uk or your usual AAB contact.
By Charlotte Edwards, Payroll & Employment Taxes Senior Manager at Anderson Anderson & Brown LLP
To find out more about Charlotte and the IR35 Team at AAB, click here.