Relief for contractors as IR35 reforms are delayed for a year due to coronavirus

IR35 reforms delayed for a year
Posting date:18 Mar 2020

Chief Secretary to the Treasury Steve Barclay has announced that IR35 tax reforms will be pushed back to the 6th April 2021.

The decision was announced among a £330bn financial package to protect the UK economy from the coronavirus outbreak.

Given the economic challenges that lie ahead, and at time when the contracting market is already on its knees, I am relieved and certainly welcome this decision.  This decision will play some part in alleviating one aspect of uncertainty for a large proportion of UK contractors, many of whom are bracing themselves for the worst in these difficult times.

What matters now is that businesses use this time wisely

Although a very welcome move, the government has confirmed that this decision is a deferral and not a cancellation. This now gives private sector businesses crucial extra time to review and refine their interim hiring strategies.

For example, many organisations have already made decisions to institute a blanket ban of personal service companies (PSCs) rather than risk any potential financially liability for tax, should contractors later be deemed in scope of IR35.

We had started to see that these risk-averse reactions to IR35 were depriving some companies of their competitive edge, and ultimately, their ability to attract the best interim talent. So, what matters now is that businesses are able to use this valuable time to get things right and successfully implement and amend their processes, whilst avoiding large scale talent drain from business-critical projects and activities. 

How are we helping our customers now? 

Over the next few days and weeks, we will be taking the time to speak with all of our clients and contractors to ensure the best course of action for each role and individual is followed.

Whether you are a business that engages contractors or a contractor yourself, please do get in touch for guidance in these turbulent times. We are here to support you. Stay safe and stay healthy.