Chancellor Jeremy Hunt’s move to revoke the repeal of the off-payroll rules that were introduced in 2017 and 2021 has thrown ‘genuinely self-employed contractors under the bus’, according to one tax compliance specialist.
“The government’s initial commitment to repealing the off-payroll rules was a sensible initiative,” said Dave Chaplin, chief executive officer of tax compliance firm IR35 Shield. “The Conservatives U-turn on the repeal has thrown around half of the genuinely self-employed contractors under the bus, and likely kissed goodbye to their success at the next general election,” he said.
Chaplin continued: “It would have been a significant step forward for the UK’s army of self-employed people who are critical to the government’s pro-growth agenda.”
He said that, without reform, the current off-payroll rules would harm the economy: “Repealing off-payroll would have returned an essential level of certainty to contract transactions in the market economy, leading to economic growth. Instead, off-payroll will continue to cause significant harm to the self-employed, major businesses, the government, and the economy.
IR35 reform has seen a tidal wave of tax avoidance schemes entering the market – ones that lure in unsuspecting contractors and pose a huge threat to the entire supply chain” – Fred Dures, PayePass
“While we agree that tax avoidance measures are sensible, the off-payroll rules over-extended, causing genuinely self-employed contractors to lose their rights to being their own boss.
Chaplin said the the anti-growth effects of off-payroll, meant that the “pro-growth Conservatives have now joined the ‘anti-growth coalition’.”
Fred Dures, founder of payroll software and compliance firm PayePass, said Hunt had caused more, not fewer, problems with the policy reversal: “Panicking and backtracking on the promise to abolish these changes won’t have the desired effect. In fact, U-turning on this pledge is likely to lead to more problems.
“IR35 reform has caused unnecessary complexity, leading to major issues for contractors, recruitment agencies and the businesses engaging these workers. It has seen a tidal wave of tax avoidance schemes entering the market – ones that lure in unsuspecting contractors and pose a huge threat to the entire supply chain.
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“By keeping IR35 reform in place and not delivering on promises to regulate the umbrella industry, this see-sawing government is failing the flexible workforce.”
Crawford Temple, CEO of Professional Passport, one of the UK’s largest independent assessors of payment intermediary compliance, said: “The off-payroll rules that were rolled out to the public and private sectors in 2017 and 2021 were ill-thought-through and damaging for the UK economy. It would appear that the government also recognises this by announcing the repeal. However, that repeal is now not proceeding. The off-payroll-working rules were built on already fundamentally flawed IR35 legislation and so we now call for a considered approach and a proper review that Liz Truss promised as part of her ministerial campaign.”
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