On Monday December 07th at 4pm the Financial Secretary of Secretary, Jesse Norman gave evidence to the Committee on the Off-Payroll reforms. The questioning comes following the House of Lords Economic Affairs Finance Bill Sub-Committee publication of its damning report, ‘Off-payroll working: treating people fairly’ in April 2020 where the committee concluded that IR35 – the Government’s framework to tackle tax avoidance by those in ‘disguised employment’ – has not worked properly throughout its 20-year history.
Despite the report, the Government pressed ahead with the measures, which reach Royal Assent on 22nd July 2020. But, since then, there have been glitches, in particular the investigation by IR35 Shield that resulted in the Treasury conceding that the legislation would need to be amended to avoid umbrella companies becoming effectively redundant. A Prayer to Annual a related Statutory Instrument, dealing with national insurance contributions, was also tabled by the Lords recently, and it was this aspect which was debated for almost the entire session.
Responding to Jesse Norman’s appearance in front of the Committee, Dave Chaplin, CEO of IR35 Shield, who uncovered the issues relating to the errant clause in the legislation, leading to the need to change the primary legislation commented:
“As the discussions indicated, HMRC and the Treasury knew the legislation contained defects before it was laid before Parliament, but then chose to do so anyway – and I agree with Baroness Kramer, who described this as ‘unacceptable’.
“Whilst the Minister gave promises that the legislation would be changed prior to April 2021, no further detail was provided, other than some vague reference to yet a new tax test. Please, no new subjective tests!
“Despite the pandemic, there were no signs of further delay or cancellation. The supply chain needs to prepare. Firms that start preparing at least by Jan 2021 should find themselves in a good position and be able to continue hiring the talent they rely on.”