Industry is positive about IR35 delay but asks for further thought and clarity.

Welcomed delay.

The delay to IR35 changes has been noted and welcomes by industry bodies APSCo and the FCSA.“ After five years of lobbying government for a proper review of IR35, we are obviously pleased and relieved on behalf of our members that the government has taken this action to remove extra burdens from the recruitment sector albeit disappointing that it has taken a crisis of this magnitude for the government to act,” said Sam Hurley, operations director at APSCo, and co-chair of HMRC’s IR35 Forum. “Although many of our members have spent an enormous amount of time and resource getting ready for this change, we believe that this delay will be widely welcomed by all our members and the sector as a whole. Now is not the time to make flexible labour more expensive or the hiring of contingent labour more difficult, when our sector is facing unprecedented times. This delay may also have the added benefit of kick starting the hiring of remote workers who operate though a PSC from end clients who have so far, as a response to off-payroll legislation, put a blanket ban on contractors working through this model.”

“We welcome the news that off-payroll reforms have been delayed for 12 months, until April 2021,” said FCSA’s Julia Kermode. “This is the right decision to help support businesses in these extremely difficult and unprecedented times.

“It is right to enable businesses to focus on the immediate complexities of responding to the coronavirus pandemic which must be the absolute priority for everyone in the UK right now,” she continued. “However, we must reiterate that this announcement only applies to the reforms that were due to impact on the private sector from April 2020. The changes that were introduced to the public sector in 2017 are still very much applicable and will need to be adhered to.

“Furthermore, we are aware through our evidence submitted to various government bodies, including the House of Lords, that some businesses have spent in excess of £700k in preparing for the private sector reforms which illustrates only the tip of the iceberg of the cost to businesses and the economy.

“I very much hope that some detailed analysis of the wider implications of this reform can be undertaken in the coming months in order to establish whether or not it should be scrapped entirely, rather than simply ploughing on in 12 months’ time,” Kermode concludes. 

Commenting on the other measures announced by Rishi Sunak, Tania Bowers, Legal Counsel at APSCo also welcomed the £330 billion stimulus package including expansion of the business interruption scheme introduced in the budget, cash grants to smaller businesses and the commitment to consult with both business and trade unions to determine what else may be needed: “As ever with these measures the devil will be in the detail,” she said. “We have seen a massive increase in enquiries to our legal helpdesk from our members – in the space of a week we have had numerous enquiries about SSP and contractor rights on top of the usual high number of queries around the implementation of IR35. While some of our larger members may well have the financial resilience to ride the storm, we have to remember that the majority of recruitment firms in the UK are SMEs. This is a sector that will be hit extremely hard given that hiring intentions in many industries are likely to be put on hold or reduced for the foreseeable future.

“What we also need from Government is further clarity,” she added. “We need clarification on how it will define SMEs in terms of the proposed SSP refund in the emergency legislation. If it is the Companies Act definition, then agency workers will not count in the assessment of 250 employees. However, if it is the Equality Act definition then agency workers will count, meaning that small recruitment businesses with large numbers of agency workers won’t be entitled to SSP refund which could potentially put them out of business.”

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