Chancellor announces review of IR35 scheme

The Conservative Party had pledged to conduct a review of IR35 regulations – the controversial rules that govern off-payroll working.

IR35 is due to be applied to private sector employers from next April. The scheme has already caused a wide array of problems in the public sector, ranging from higher costs, staff upheaval to legal cases.

Chancellor’s announcement

The Conservative promise to review the scheme was made by Chancellor of the Exchequer, Sajid Javid, during an interview for BBC Radio 4’s Money Box programme.

It comes as part of the Conservative Party’s election messaging to support self-employed workers. Sajid Javid said: ‘We’ve already said that we’re on the side of self-employed people. We will be having a review and I think it makes sense to include IR35 in that review.’

AAT view of developments 

AAT notes that the Chancellor’s announcement brings the Conservative Party into line with other political parties and it can be viewed in the context of the election campaigning.

Phil Hall, AAT Head of Public Affairs & Public Policy said: “With most political parties, including Labour, the Liberal Democrats and even the SNP, now promising a review of IR35 it comes as little surprise that the Conservatives have relented and said they will also review their plans to extend the off-payroll working rules to the private sector.”

The Chancellor has said the review would be swift and did not indicate that the April 1 introduction could be delayed.

However in September HMRC suddenly announced that it was delaying another major change – the introduction of the Construction Industry Scheme Reverse VAT Charge.

This happened just weeks before it was due to be implemented and left many agents feeling frustrated that they had spent time contacting clients, who were left confused.

Against this backdrop any uncertainty over IR35 will be seen as unhelpful.

How to proceed

However, with no certainty of delay, AAT’s Phil Hall advises that preparation remains the best policy:

“Employers should beware that politicians promises of reviews are very different to promises for change. As a result, continuing to prepare for the April 2020 introduction of IR35 remains the most sensible thing for companies to do.”

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David Nunn is Content Manager at AAT.

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