Off-Payroll amendment fails – what to do now?

21st May, 2020

Off-Payroll amendment fails – what to do now?

The proposed amendment

On Tuesday 19^th May, Conservative MP David Davis’ proposed amendment to the Finance Bill 2019-21, calling for the Off-payroll reforms to be deferred until 2023-24 to enable the economy to recover by supporting businesses, went before the House of Commons. However, when Labour declined to vote, all chances of the amendment gaining a majority fell away making any vote redundant.

Unfairness ignored

The legislation, which was originally scheduled to become law in April 2020, was delayed – barely weeks before it was due to be implemented – as a response to the coronavirus pandemic. A month later, a damning report was published by the House of Lords Economic Affairs Committee which cast serious doubt on the legislation’s fairness. The Committee was also of the view that rolling out IR35 reforms into the private sector would cause further damage to the economy at a time when businesses will be struggling to get back on their feet.

Yet after all this, the situation remains the same and, for now, the reforms will still go ahead in April 2021 in their present form. Any promised review six months after its implementation is unlikely to offer up significant changes, especially as the Government is wilfully ignoring all reasonable call to review the off-payroll legislation before the rules come in to force. It is evident that the financial burden the Treasury is now under due to the virus is one they hope to alleviate with monies raised through IR35 reform.

Continue to apply pressure

Despite the unfavourable outlook, now this is not the time to give up on pressurising the Government. Contractors should continue to lobby their local MP, drawing attention to the House of Lord’s Committee’s recommendations and the issue of fairness which needs to remain at the fore. As disheartening as the recent events have been, to stop protesting will serve only to give the Government an easy ride. It is not inconceivable that a concession could be drawn out of the politicians in charge.  More details about the ongoing campaign can be found here- https://stoptheoffpayrolltax.co.uk/

Don’t fail to prepare

What is certain, however, is that not preparing for the reforms would be highly imprudent. This applies to end clients, agencies and contractors alike. The one-year deferment should be seen as an opportunity to ensure that you are ready for the Off-Payroll legislation to come into effect in April 2021 and not leave it until the last minute.

What is certain, however, is that not preparing for the reforms would be highly imprudent. This applies to end clients, agencies and contractors alike. The one-year deferment should be seen as an opportunity to ensure that you are ready for the Off-Payroll legislation to come into effect in April 2021 and not leave it until the last minute.

For clients and agencies, this means ensuring that robust processes are in place for making Status Determination Statements and reviewing their contractor’s IR35 position regularly.

For contractors, this may mean considering closing their limited company or working through an umbrella company. Alternatively, if they wish to continue contracting, they should engage with their clients and agencies as soon as possible.  We would also advise that contractors have contracts and working practices reviewed regularly. Contractors could also consider working under a Statement of Work, but only where there is a genuine fit.

Engaging with a law firm can demonstrate the taking of “reasonable care” under the legislation. As a law firm regulated by the SRA, WTT Legal can assist end clients, agencies, and contractors as they prepare for this legislation. For further information please contact info@wttlegal.co.uk. If you are considering engaging through an umbrella, please contact info@contractor.coop