Spring Budget 2024: Hunt ignores off-payroll rule concerns from MPs, by going silent on IR35

Jeremy Hunt ducked IR35 at Spring Budget 2024 despite fresh concern by MPs that the rules ‘deter legitimate economic activity.’

Nowhere in the chancellor’s 98-page report, released yesterday, does IR35 of 2000 or the Off-Payroll Working rules of 2017/2021, feature.

While Bauer & Cottrell’s Charlie Hemsworth “expected” the omission, she says it may have disappointed the Public Accounts Committee.

'Tough HMRC'

In a report last month, the committee said it was concerned that the complexity of the rules was driving some companies overseas.

It also said a lack of confidence in applying the rules while HMRC is “tough” on mistakes, could be deterring use of PSCs “unnecessarily.”

Hemsworth says the PAC was “very rightly echoing” industry concerns, and so a reply by Mr Hunt would have been proportionate.

'OPW mess'

“Instead, we’re left hoping drastic action to adequately address the current mess of OPW, once and for all, makes into the manifestos.”

The Bauer & Cottrell director also told ContractorUK that for PSCs, the PAC’s report represents a “glimmer of hope” for an IR35 rethink.

Stephen Rookes, an adviser to APSCo suggests his hopes were dashed when the concerns of parliament’s oldest committee got ignored.

“Given the criticism of HMRC from the PAC, no proposed reform yesterday to IR35/OPW is disappointing,” he told ContractorUK.

'Onerous and impractical'

An advisory to PSC owners like Rookes, Moore Kingston Smith (MKS) last night described the OPW rules as “onerous and impractical.”

“Unfortunately, there were no announcements [at Spring Budget 2024] addressing…[this] regime for limited company contractors.

“That’s despite criticism over the effectiveness of these [onerous and impractical] rules by the PAC,” says MKS tax director John Williams.

'Draconian'

DNS Associates says the “draconian” OPW rules have “compelled” many contractors to use umbrella companies, which are unregulated.

“This results in limited companies sitting dormant, incurring running costs without generating income,” said DNS director Sid Agarwal.

“All the while, the hope for future reform of these IR35 rules adds uncertainty and apprehension to the situation for contractors.

“And that situation is a challenging landscape, as the benefits and flexibility of a ‘LTD’ diminish in the face of increased tax burdens.”

'Urgent'

Tania Bowers, global public policy director at APSCo, said: “[Spring Budget 2024] once again shows that there is still not enough innovation in UK legislation to support the flexible labour market.

“Reforming the off-payroll working rules is still an urgent action that we have advised policy-makers is a necessity, if highly skilled contractors are to be able to boost access to core skills across the country.”