Contractors ‘fragile’ from uncertainty ‘triple-whammy’ of Brexit, covid and IR35 reform

Contractors are facing a “triple whammy” of uncertainty from Brexit, IR35 reform and covid-19, according to a freelance trade body’s policy boss.

Andy Chamberlain, of the Association of Independent Professionals and the Self-Employed, said the effects on such people who work for themselves explains their “fragile state.”

Coronavirus is the “main” pressure, Brexit is “lurking in the background” and the “complex” legislation to reform IR35 “rumbles on”, IPSE’s policy director said.

'Perfect storm'

But on a SME adviser webinar and in answer to a question from ContractorUK, he also said that part of what another panellist called the “perfect storm,” could actually be delayed. 

“They’ve just realised there’s a big problem with the legislation,” said Chamberlain, referring to HMRC admitting that the current IR35 reform draft inadvertently defines umbrella companies as intermediaries.

“They’re going to have to put it back in the Finance Bill in the next year they now think. I would have thought a good thing to do would be just to say, ‘We’re going to pause…on that [IR35 reform from April], and wait and see how we’ll get through the covid pandemic.”

'IR35 reform is done and dusted'

His recommendation comes after a tax expert suggested that workplaces being locked down for four weeks from today due to covid-19 was cause enough to postpone the April reform.

But speaking yesterday on condition of anonymity, the owner of a niche recruitment agency said there was now little appetite from big business to further delay the inevitable.

“It feels like IR35 is done and dusted and we have all moved on. The larger firms especially will no doubt hold firm on their ‘inside’ determinations [where those have been issued].

“And you can’t really blame them,” added the recruiter. “The project to assess their contractor workforce, issue status determinations, manage the appeals process and enter into new contracts was not insignificant. They’ve got no appetite whatsoever to repeat it all.”

'Pro-enterprise Budget 2021'

However, the “messaging” at Budget 2021 should be “pro-enterprise” enough to encourage redundant or previously furloughed staff to take the plunge, says the FSB’s Sonali Parekh. 

“Many people who will come off the furlough scheme… [may not] have jobs to go [back] into and they will have to potentially think about self-employment”, she told the webinar, which was hosted by FreeAgent.

“[Like] entrepreneurship…it can be a really positive way of reengaging with the labour market and remaining economically active in some form or another. 

“And it’s really important that entrepreneurs feel that the government is working with them rather than against them, during this really crucial period of time.”

'Obliterating businesses'

But even before then, officialdom could act according to Mr Chamberlain, who said: “What we could do with is a government which seems to understand the concerns that micro-businesses have around all these issues [Brexit, Covid, IR35 reform].

“The main [issue for them is this] once-in-a-100-year pandemic which is completing obliterating businesses, left, right and centre. And now there’s the new lockdown restrictions. My heart goes out to them.”