IR35 changes delayed by one year

This delay is welcome relief for businesses and self-employed contractors, already facing serious financial issues as a result of the ongoing COVID-19 pandemic.

The delay follows debate in the House of Lords Finance Bill Sub-Committee, which questioned whether the proposed changes should go ahead at all. However the Government has been clear that it is not cancelling the changes; this is just a delay to implementation in light of the financial impact of COVID-19.

Many businesses have already carried out assessments and are largely prepared for the changes. This preparatory work is unlikely to go to waste as the Government remains committed to implementing the changes next year. Updated assessments may be required closer to the time if working arrangements for contractors have changed by then.

For those of you that have used the Ward Hadaway IR35 Toolkit, the advice and documentation remains valid, save for the details of the implementation date which we will update together with any further changes that may take place throughout the year.  Our consultancy agreement can be used now irrespective of whether a status determination has been made. For businesses that have not yet finalised plans for the proposed changes our advice is to revisit preparing for the changes later this year.

The delay in implementation may not rest well with businesses that have made determinations of employed status or issued a blanket ban on contracting via personal service companies. Whilst the delay means that deductions do not need to be made from April this year, this also provides an opportunity for businesses and contractors to restructure how they work to ensure that they do not fall within the off-payroll rules next year.

We will provide updated advice on this topic as it develops. If you have any specific queries on this update please contact Paul Scope via email at paul.scope@wardhadaway.com or on 07540556295.

Click here for further information about IR35.