Contractors braced for Budget 2019 on November 6th
The government has wrongfooted the speculators by announcing autumn Budget 2019 is to be delivered on Wednesday November 6th, not October 20-something as initially rumoured.
For the contractor sector, the early November delivery date for Sajid Javid’s inaugural Budget means any “revocation” by him of Loan Charge 2019 now looks highly unlikely.
In fact, it can table legislative changes, but the Loan Charge Review will still be live by Nov. 6th, and Mr Javid won’t wish to upstage Sir Amyas Morse, adds tax adviser Carolyn Walsh.
'Firms only starting to wake up'
But another contractor accountant, Chris James, is more interested in the feasibility of Budget 2019 knocking on the head another policy, and one which the chancellor has called “silly”.
“Business groups are starting -- only just -- to wake up to the work required just to continue to use contractors compliantly [due to private sector IR35 reform in April 2020].
“But to be frank, I fear that HMRC have managed to convince Mr Javid that a policy he has previously been rightfully suspicious of – IR35 -- doesn't need any more of his time.”
The JSA Group boss added that if he was feeling “hopeful,” maybe the chancellor was mulling an announcement on pausing IR35 reform, due to the likely-looking general election.
But mostly Mr James is feeling the complete opposite. “I'm very worried, worried Mr Javid will not have even had the time to consider -- even briefly -- the impact of [IR3 reform].
“[The reform will] make it harder to engage flexible workers in Tech and Finance, at the exact same moment as we try to negotiate whatever Brexit turns out to be,” he said.
Even IR35 specialist Seb Maley concedes that his forte will probably be forced to take a back seat at this Budget due to the ‘B-word.’
“I imagine this Budget will be dominated by Brexit, regardless of whether the UK has left the European Union by October 31st,” he said yesterday, adding:
“Given continued Brexit uncertainty, the chancellor would be unwise to announce [new] reforms that negatively impact freelancers and contractors, who are vital to the economy.”
'Not normal, crazy'
Usually at this time of year, with a Budget looming, and with draft IR35 legislation recently announced, the government would use the November statement to respond to the draft.
Yet, IR35 expert Kate Cottrell adds, Brexit, parliamentary inertia and a likely election means it’s not a “normal world,” it’s “crazy”. But a pause to find calmness isn’t her expectation.
“I am aware that some commentators think that the government could actually delay the new IR35 rules, but I think this may be wishful thinking.
“And as we have just seen, many of the banks are changing their policies on using contractors irrespective of whether or not the changes go ahead.
“It is highly doubtful that this could raise enough tax and NICs -- in HMRC’s or HMT’s eyes -- for a delay.”
'No challenges of any substance'
At CWC Solutions, where Ms Walsh is managing director, the outlook is similar.
“The government seems pretty much set on enforcing IR35 through the back door, which hirers seem more than happy to close and bolt shut.
“There have been no challenges of any substance so there will be no pressure to relax the rule change,” she said. “So the Budget’s focus looks like it will be on vote-winning, post-Brexit.”
In reluctant agreement is Mr Maley, CEO at Qdos Contractor. “The Budget does mark an opportunity for the chancellor to scrap incoming IR35 reform which, as many might remember he didn’t actually announce.
“While this would certainly be the smart thing for Mr Javid to do,” he said, “contractors should work off the basis that changes to IR35 will arrive next year until told otherwise.”
Speaking last night, a former tax inspector confirmed it looks like a green-light for the 2020 status framework, partly as there was no amber or red light to it in yesterday’s Queen Speech.
“There are a few paragraphs in the official background notes to the Queen’s Speech which are ambiguous,” the former inspector said. “The ambiguity is such that these could actually be confirming that the new off-payroll rules are going to take effect from April.”
Signalling a need to put domestic policies higher up his ‘to-do’ list, Mr Javid said: “This will be the first Budget after leaving the EU.
“I will be setting out our plan to shape the economy for the future and triggering the start of our infrastructure revolution. This is the right and responsible thing to do – we must get on with governing.”
Despite the chancellor implying the October 31st Brexit deadline is going to be met, HM Treasury said that a non-negotiated withdrawal from the EU would necessitate quick action by the UK, in the shape of a ‘no-deal’ Budget “in the weeks thereafter.”