In response to the COVID-19 pandemic, the Government has taken the decision to postpone the controversial IR35 reform for a year until 6th April 2020.
This gives contractors another 12 months to decide on their approach when working in the private sector.
Prior to the latest announcement by Steve Barclay, the Chief Secretary to the Treasury, contractors had given up hope of change after the Chancellor confirmed in the Budget that the Off-Payroll working rules would be introduced on 6th April 2020 as planned.
During his speech to the Commons, Barclay insisted that the Government has every intention of rolling the IR35 changes out next year.
He said: “This is a deferral in response to the ongoing spread of COVID-19 to help businesses and individuals.
“This is a deferral, not a cancellation and the Government remains committed to reintroducing this policy to ensure people working like employees but through their own limited company pay broadly the same tax as those employed directly.”
In response to the announcement, Andy Chamberlain, Director of Policy at IPSE said: “The Government has done the sensible thing by delaying the changes to IR35 in the private sector.
“These changes have already undermined the incomes of many self-employed businesses across the UK. However, they would have done even more serious damage if they had gone ahead as planned.
“It is right and responsible to delay the changes to IR35 for at least a year during the Coronavirus crisis, to reduce the strain and income loss for self-employed businesses.”
COVID-19 seems to be the genuine reason for the delay, but many experts have said that the campaign by contractors, and even more so, the refusal of contractors to be shoved into inside IR35 contracts may have convinced the Treasury to take action.
The potential loss of a third of the contractors used by companies due to the changes may also have had an impact at a time where those in the sector already face challenges as businesses look to cut costs.
Those contractors campaigning for the abolition of the IR35 reforms have clearly made a significant contribution already in getting the Government to listen, enlisting the House of Lords and some MPs to their side.
Now they have another opportunity to try and prevent or perhaps amend the legislation again so that it takes into consideration the concerns of contractors.
There are calls for contractors to unite now to bring about change, while also preparing for a potential introduction of IR35 Off-Payroll reforms next year.