Harold Wilson said “a week is a long time in politics”.
The Budget confirming that the Off-Payroll legislation would indeed be going ahead from 6th April 2020 was only on the 11th March.
But yet by the17th March, the Chief Secretary to the Treasury Stephen Barclay announced in Parliament that the legislation would be deferred to April 2021. Deferred, NOT cancelled as he pointed out three times.
Yes Steve (may I call you that), we understand that the word deferral means something is not cancelled, but thanks for making that clear to us all.
The Lords in their inquiry to the Off-Payroll proposed legislation grilled HMRC and the Treasury and were very annoyed about the lack of flexibility on delaying this legislation at a time when business would be reeling from Coronavirus issues.
One would have hoped that on Budget Day they would have realised this was not the correct direction.
However, due to the involvement of the Lords and the unfortunate progress of the virus, common sense eventually prevailed.
I would like to helpfully point out to Steve (we’re old friends now) who has taken up this new role only recently in February 2020, that the legislation in question is ‘Off-Payroll’ NOT “Off-Roll-Payroll” as he repeated twice in his announcement on 17th March.
Involvement in too many ‘roles’ may give the appearance that you’re not on top of your brief and it was a roll of the dice that brought you to the new job!!
But having said all that, what the Treasury has now done will have a major impact on the contracting industry which in most cases should see all contractors being able to continue to work through their personal companies as up to now.
However, as the deferral came at such a late stage, it is possible that some end clients may still decide that they want their contractors to work PAYE through the agency or an umbrella company.
I would stress this is not a tax decision as there will now be no Off-Payroll legislation until April 2021. However, some end clients may decide commercially that having gone through a tortuous process of IR35 assessment, they now don’t want to work with limited company contractors any longer.
So, it is important that every contractor who has had an inside IR35 determination speaks to their end client to confirm that will void their determination and continue to pay the limited company on a gross invoice basis.
We’re thrilled that for the vast majority of our clients, this last minute deferral will mean they will carry on working through their limited company as they have done up to now and we hope that in the year’s grace that has been given, all organisations work constructively to creating a vastly improved and fair IR35 assessment process for the long term future.