Employment experts have warned that hopes of a further IR35 delay are “fanciful”, despite months more of Covid lockdown measures coming.
The economic impact of the virus saw the much-criticised reforms, due to be introduced this year, pushed back to April 2021.
With Boris Johnson warning of up to another six months of lockdown measures, Robert Phillips, legal director at Addleshaw Goddard, said “clearly, there are good reasons why this reform might be deferred further”.
However, he said the Government has been “resolute”, in tackling what they see as a “significant loss in tax revenue, avoidance in industry and difficulty in pursuing individual PSCs (personal service companies)”.
For Scotland, First Minister Nicola Sturgeon has stopped short of repeating Mr Johnson’s “six months” claim for England, instead saying measures will be reviewed every three weeks.
The IR35 reforms, six months away as of tomorrow, come as the North Sea has seen huge job losses among its contracting workforce, while a major backlog of maintenance work is planned for next year.
A House of Lords report in March described the rules, which aim to stop freelancers registering themselves as employees to pay less tax, as “inherently flawed”.
It added that some workers will be left without any of the rights of an employee or the tax benefits of being self-employed.
Brian Rudkin, head of employer services at Johnston Carmichael, described the prospect of any further delay as “fanciful”, confident that the measures will go ahead as planned.
He said: “The continued debate on whether IR35 will or will not go ahead as planned on 6 April is fanciful, even in these troubled times for the economy, and is fuelled more by wishful thinking than logic.
“The Government pushed through this legislation during a period when the coronavirus and lockdown measures in the UK were at their most prevalent and so the coronavirus is unlikely to be a reason to reverse this decision.”
Oil and gas is expected to be heavily impacted by IR35 due to its reliance on contractors.
The move, reported to bring an extra £1bn annually to the Treasury, Will put workers doing similar jobs under the same taxation regime.
“Off-payroll” workers in the public sector are already affected – typically businesses comprising one person working as an employee in everything but name – and is now being rolled out for the private sector.
The obligation to determine the tax status of employees is falling to medium and large private sector companies in April.
Seb Maley, CEO of IR35 specialist Qdos, said: “While another delay or, better still, a total rethink of the changes would be welcome given what businesses are up against right now, oil and gas firms cannot and must not pin their hopes on another last-minute postponement.”
As the six-month countdown approaches to April, Qdos has noticed “more businesses are taking the reform seriously”,
Mr Maley added: “By that, I mean firms are beginning to understand that banning contractors is not the way to go about things.
“After all, the oil and gas industry relies heavily on the skills and flexibility of contract workers, perhaps even more so in challenging economic conditions such as these.”
Recommended for you
