“We should repeal the silly IR35 tax on providers of personal services.” This is the headline phrase that the Association of Independent Professionals and the Self-employed (IPSE) are quoting back to Mr Javid in an attempt to make him reverse the intended introduction of Off-payroll working rules to the private sector.
These rules are set to become the norm for the medium to large size companies within the private sector from April 2020. Only those who meet the precise criteria as defined in the Finance Bill 2019/20 as a small company will be exempt.
The belief is that the introduction of the rules to the private sector will be damaging to the UK economy, contractors and the engaging company. An argument that has in one guise or another been heard before when the rules were introduced to the public sector.
There is an argument that cannot be refuted insofar as there will be an extra financial burden where the off-payroll working rules apply in that the engaging company will be liable to employer NICs and the apprenticeship levy. Not only that, there could be a drive by the contractors to increase their rates to compensate for the perceived loss in tax and NICs.
It would appear that Mr Javid is in a somewhat of a dilemma; as recently as May this year he was saying that “bureaucracy and paperwork are stifling the growth of our small businesses”, a comment to which IPSE agree and yet his predecessor and indeed the previous government had doggedly pursued their decision to introduce the rules. Whatever path he chooses to follow, negative comments are bound to follow. It should be noted that the comment made was in response to a report written by Nick King, head of business at think tank, Centre for Policy Studies.
Where we are now! April 2020 will see the introduction of the Off-payroll working rules into the private sector. Engagers / employers will have to identify whether or not the contractor they are engaging falls within or outside of the legislation and all that goes with the decision.
