Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise
  • OHW+

Personnel Today

Register
Log in
Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise
  • OHW+

IR35CoronavirusEmployment lawLatest NewsGig economy

House of Lords committee reveals IR35 concerns

by Jo Faragher 22 Apr 2020
by Jo Faragher 22 Apr 2020 Treasury chief secretary Steve Barclay announced that IR35 reforms would be postponed until 2021
Kirsty Wigglesworth/AP/Shutterstock
Treasury chief secretary Steve Barclay announced that IR35 reforms would be postponed until 2021
Kirsty Wigglesworth/AP/Shutterstock

The House of Lords committee looking at the proposed extension of IR35 regulations to the private sector has written to the Treasury with a list of damning concerns about the proposed reforms.

The extension to the off-payroll working rules, due to come in on 6 April, was postponed last month due to increased business uncertainty caused by the coronavirus pandemic. The legislation is now expected to take effect on 6 April 2021.

IR35

Webinar: How IR35 will impact your organisation 

Lords launches IR35 review as freelancer confidence ‘plummets’

Announcing the deferral, Treasury secretary Steve Barclay said “this is a deferral not a cancellation” and reaffirmed the government’s commitment to extending the rules, which make employers liable for ensuring that contractors working through limited companies pay the right levels of tax and National Insurance.

Members of the House of Lords finance bill sub-committee, led by Lord Forsyth of Drumlean, had been conducting a review into the legislation and have now produced their recommendations and set out a number of questions for the Treasury to answer.

The committee’s concerns include the cost to businesses in preparing for the reforms, the potential for contractors to lose business or face declining rates, and whether stringent limits on the use of contractors could hamper the labour market as employers try to flex-up work and rebuild business once the coronavirus crisis is over.

The letter says: “Contractors have told us that the coronavirus pandemic means that they do not expect to win new business in the next few months. How will the government support these people? Will they be compensated for any business lost because companies terminated contracts in anticipation of the implementation of the new rules in April 2020?”

It adds: “The government’s decision to delay the implementation of the reforms seems to acknowledge that the reforms indeed represent a significant additional burden for business, one that they will be unable to shoulder during the present crisis. Is this a fair assessment?” It also questions whether businesses will have recovered enough from the impact of the pandemic by April 2021 to bear the additional burden of managing off-payroll working rules.

The committee challenges the Treasury on whether the introduction of IR35 reforms to the public sector in 2017 proved successful, with many employers imposing blanket determinations on contractors and losing important workers as a result. It asks the government how it will identify businesses who are making blanket assessments that could lead to reduced pay or even moving work offshore.

The committee also demands of the government:

  • How it will police the use of non-compliant umbrella companies who may be using “disguised remuneration schemes”, and whether there should be a higher degree of regulation of these companies.
  • Whether it will improve the reliability of its Check Employment Status for Tax (CEST) tool, which committee witnesses described as “discredited”, in particular around the fact it fails to reflect mutuality of obligation, a key employment status test.
  • Why it had not consulted the Office for Tax Simplification on the most recent review of the proposals. “Why was this? How precisely will these proposals help to simplify the tax system?”, the letter says.
  • Whether the planned reforms were a good fit with the government’s aims to support the gig economy and do “whatever it takes” to support UK businesses to emerge from the coronavirus crisis.

The letter also expresses a concern that the development of the reforms began before the government implemented the Good Work Plan, which followed from the recommendations of the 2017 Taylor Review.

The Taylor Review argued that determining employment status should be simplified, particularly around the sometimes conflicting legal parameters around employment status for tax and status for employment rights. The findings of a 2018 consultation into this are yet to be published.

The letter adds: “What assessment has the government made of whether those engagers with contractors who are treated as employees for tax purposes but not for employment rights will cancel contracts rather than keep contractors on under the Covid-19 job retention scheme?

“If such contractors have been using PAYE, will they be able to benefit from any measures that the government puts in place to protect self-employed people during the coronavirus outbreak?”

Finally, it challenges the government on whether “the strategy of treating contractors and freelancers as employees for tax purposes, but not for employment rights purposes” could have a negative impact on innovation and flexibility in the workforce as companies emerge from the current crisis.

Sign up to our weekly round-up of HR news and guidance

Receive the Personnel Today Direct e-newsletter every Wednesday

OptOut
This field is for validation purposes and should be left unchanged.

“How will any such diminution enable the UK workforce to respond in the short term to the economic impact of Covid-19, and in the longer term to the challenges of the Fourth Industrial Revolution?” it concludes.

The committee has asked for a response from the government in 10 working days.

Jo Faragher

Jo Faragher has been an employment and business journalist for 20 years. She regularly contributes to Personnel Today and writes features for a number of national business and membership magazines. Jo is also the author of 'Good Work, Great Technology', published in 2022 by Clink Street Publishing, charting the relationship between effective workplace technology and productive and happy employees. She won the Willis Towers Watson HR journalist of the year award in 2015 and has been highly commended twice.

previous post
70% of firms have furloughed staff
next post
Four in 10 dads can’t afford shared parental leave

1 comment

Dennis Major 22 Apr 2020 - 3:22 pm

I must admit that I have never been a fan of the House of Lords but this article has changed my opinion. IR35 has always seemed a sledgehammer to crack a nut. I have been working as a contractor with my own limited company since 2009 and pay all my taxes due.
The reason it is liked by the treasury is that it is an easy way of increasing tax revenue as the target audience do not have the ability to move off shore.

Comments are closed.

You may also like

Fire and rehire: the relocation question

22 May 2025

Public sector workers gain pay rises of up...

22 May 2025

UK net migration slashed by half in one...

22 May 2025

How neuroscience can unlock employee recognition

22 May 2025

UK universities fret over fall in international students

22 May 2025

HSBC employees warned of office attendance link to...

22 May 2025

The Law Society: Navigating the new world of...

22 May 2025

Workplace stress: Why it’s time to rebrand resilience

22 May 2025

Restaurant tips should be included in holiday pay

21 May 2025

Fewer workers would comply with a return-to-office mandate

21 May 2025

  • 2025 Employee Communications Report PROMOTED | HR and leadership...Read more
  • The Majority of Employees Have Their Eyes on Their Next Move PROMOTED | A staggering 65%...Read more
  • Prioritising performance management: Strategies for success (webinar) WEBINAR | In today’s fast-paced...Read more
  • Self-Leadership: The Key to Successful Organisations PROMOTED | Eletive is helping businesses...Read more
  • Retaining Female Talent: Four Ways to Reduce Workplace Drop Out PROMOTED | International Women’s Day...Read more

Personnel Today Jobs
 

Search Jobs

PERSONNEL TODAY

About us
Contact us
Browse all HR topics
Email newsletters
Content feeds
Cookies policy
Privacy policy
Terms and conditions

JOBS

Personnel Today Jobs
Post a job
Why advertise with us?

EVENTS & PRODUCTS

The Personnel Today Awards
The RAD Awards
Employee Benefits
Forum for Expatriate Management
OHW+
Whatmedia

ADVERTISING & PR

Advertising opportunities
Features list 2025

  • Facebook
  • Twitter
  • Instagram
  • Linkedin


© 2011 - 2025 DVV Media International Ltd

Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise
  • OHW+