The government has announced a one-year delay to controversial changes to IR35 due to the coronavirus pandemic. This gives businesses a further year to make the necessary changes.
HMRC’s Announcement about IR35 changes:
Changes to the off-payroll working regime will not take effect until April 2021 due to the coronavirus pandemic, HMRC confirms.
In light of the coronavirus pandemic, changes due on 6 April 2020 will now take effect from 6 April 2021, meaning that the existing off-payroll working rules will continue for a further year.
Status Determination Statements (SDS):
For those who have already made changes to reflect the new rules Status Determination Statements (SDS) will have no standing in law.
According to Steve Barclay, chief secretary to the Treasury:
Barclay said that move is part of a broad package of measures the Treasury has announced to protect the economy from the coronavirus outbreak.
He confirmed that the decision was “a deferral, not a cancellation, and the government remains committed to reintroducing this policy”.
Last week, the Chancellor confirmed that the extension of IR35 reforms to the private sector would go ahead as planned. The latest announcement means an amendment in Finance Bill legislation to show the new start date of 6 April 2021 as fresh legislation.
However, some contractors say the delay has come too late as they have already lost out on business.
The House of Lords announced in February that it had begun an inquiry focused on the proposal to extend the off-payroll working rules.
Tim Stovold, the partner at Moore Kingston Smith, said:
“This decision should have been made well in advance of the April 6 launch date. Coronavirus has finally convinced the government to delay this catastrophic change to the IR35 rules.
Chief executive of IR35 specialist Qdos Contractor, Seb Maley, said:
“The government had “seen sense and made the right call” in these “unique” circumstances.”
Matthew Sharp, a lawyer at Fieldfisher, suggested:
“The delay will also give businesses time to properly prepare for IR35.HMRC will also get the opportunity to improve communications around the changes.”
Further, he stated that the government should use this extension to improve the quality of its communication on this issue. Also, address concerns about the efficacy of HMRC’s online tax assessment tool, which has proved to be unfit for its purpose.