Lords press to further delay IR35 reform, citing 29 unresolved off-payroll ‘difficulties’

The chairman of an influential Lords committee is putting pressure on the Treasury to delay IR35 reform, on top of the delay which his inquiry already secured with help from covid-19.

Lord Forsyth says in a letter which the committee has made available to ContractorUK that the government ought to “postpone” the new implementation date of April 2021 even further.  

Specifically, and exceeding the usual call to delay for a year, the off-payroll reforms should be deferred “until it [government] resolves the difficulties”, the Tory peer writes in his letter.

Sent to Treasury minister Jesse Norman, who agreed to appear before the committee on March 23rd, the letter points out that the inquiry had to be cut short due to the coronavirus outbreak.  

'Scathing'

So Lord Forsyth now wants Mr Norman to answer questions on “difficulties” with the reform which the inquiry found. He asks for all 29 to be answered by the minister in just 10 days.

“A very well-written letter…the tone [of which is] perfect”, reflected an IT contractor online. “But you can tell from the way it’s written that the author is scathing.”

At the very least, Lord Forsyth’s letter to the minister shows just “how many holes there are in the government’s plan for IR35 reform,” according to Qdos.

The status advisory added: “In addition to scrutinising the cost of implementing the off-payroll reform, the letter also [poses]…questions regarding the success of public sector changes, blanket assessments, the impact on umbrella companies, HMRC’s IR35 tool -- CEST, and the fairness of the reform.”

'Ill-conceived'

But as valid as they are, “all these issues have been raised countless times and all so far [officially] dismissed under an ill-conceived banner of ‘fairness’,” says IR35 expert Kate Cottrell.

Not impressed by the government’s dismissals to date, the co-founder of Bauer & Cottrell also said:

“Surely, Mr Norman can’t ignore this comprehensive, probing evaluation of the reality of the situation?

“My big fear is that he won’t even read Lord Forsyth’s letter and it will be replied to by an HMT/HMRC civil servant, churning out the same stock responses we’ve had for four years.”

'Delay calls will only grow because of covid'

More positively for the peer’s delay hopes, a former Liberal Democrat MP said he is “suggesting” to current members of the House of Commons that they omit the off-payroll provisions from Finance Bill 2019/21.

Currently not contained in the bill, the fear for those wanting the IR35 provisions shelved or scrapped is that they will be inserted at ‘committee stage,’ which follows the bill’s second reading on Monday.

That stage gives MPs their first opportunity to debate the overall principles of the bill’s contents and, only if the bill passes second reading, does it move on to committee stage.

The former Lib Dem MP told ContractorUK: “Calls for a delay are [only] likely to grow as a result of the Covid-19 crisis and the fact that [because of it], MPs won’t have the normal ways of challenging the government and of scrutinising the Finance Bill.”

'Government has a lot of work to do'

Others who have called for a deferral, such as Qdos CEO Seb Maley, fear that the current launch date of April 2021 will clash with the economy just starting to recover from covid-19.

“The government has a lot of work to do,” Mr Maley said. “Lord Forsyth has asked a number of important questions that the government must provide clear and honest answers to.”

To some extent, the Tory peer’s stance probably won’t surprise Mr Norman.

“It was obvious whilst giving evidence that the Lords were on the ball and taking the evidence seriously,” said accountant Justine Riccomini, writing on LinkedIn since her inquiry testimony.

“I was impressed by the level of reading they must all have done in advance of my session.”

'Dreadful times'

Whether Mr Norman now reads what Lord Forsyth has written remains to be seen, however. “No doubt the Treasury’s financial secretary is very busy in these dreadful times,” says Ms Cottrell.

“But he needs to be seen to genuinely make an effort to understand the issues and respond honestly and transparently to the questions raised. I am not holding my breath though.”

Clearly wondering if the ‘horse has already bolted’, a contractor advertising his status as ‘IR35 negotiable’ reflected: “The damage is done unfortunately. Clients I’m talking to are now sticking with a ban on PSCs.”