IR35, House of Lord’s Committee report ignored

30th April, 2020

IR35, House of Lord’s Committee report ignored

The findings

This week saw the publication of the House of Lords Economic Affairs Committee’s findings of its review into off-payroll working, or IR35 as it is better known.

In the words of the chair, Lord Forsyth of Drumlean:-

“The Committee welcomed the Government’s decision to defer these off-payroll working rules in the wake of the Covid-19 pandemic.

However, our inquiry found these rules to be riddled with problems, unfairnesses, and unintended consequences. The potential impact of the rules on the wider labour market, particularly the gig economy, has been overlooked by the Government. It must devote time to analysing all of this. A wholesale reform of IR35 is required.”

Flawed from the outset

The report was highly critical of the IR35 regime which in its view has never worked satisfactory in it’s 20 years since being introduced.  Instead of tinkering around the edges with who is responsible for the status determination, they would prefer a fundamental rethink of the legislation, and the creation of one that linked the taxation regime with employment rights in some way which the current one does not.

It also recommended that any redesign incorporate the key principles of

• Certainty
• Simplicity
• Fairness
• Supportive of growth
• Administratively straightforward
• Enforceable

The Committee asked that the Government announce by October 2020 whether it will indeed implement the off-payroll rules in April 2021. 

Recommendations ignored

However, they did not need to wait too long for the answer to that question.  On the same day Jesse Norman, Financial Secretary to the Treasury, stood up in the House of Commons (albeit virtually) and confirmed that the Government still intended to enact the rules by the 2021 date thereby largely ignoring the wisdom of the committee of Honourable Lords.

That said, there is still doubt whether the legislation will make it into this year’s Finance Bill given the all the other pressing issues facing parliament and the lack of time for the House to debate these controversial measures. 

Call on your MP

There is every opportunity therefore for you to lobby your MP and insist they read the report themselves before voting for reforms which will damage the flexible workforce at a time they will be needed the most.