Tories and Labour plan to unveil Budget 2020 in February
Labour and the Conservatives have each specified Budget 2020 will be delivered in February, indicating contractors ‘should finally get certainty on IR35 reform within three months.’
Reflecting on the parties’ announcements, AR Tax Accountants said that whether the reform gets watered down, delayed or rubber-stamped, contractors should find out on Budget day.
But that day is yet to be pinned down if the Tories win Thursday’s vote, as party leader Boris Johnson only announced a “Brexit Budget” would be unveiled in his first 100 days.
That actually implies Mr Johnson’s already-made choice of chancellor Sajid Javid, has until March 22nd to deliver a Conservative Budget, yet the PM did say it would be “in February.”
Should Labour triumph at the polls, however, shadow chancellor John McDonnell has committed to unveiling his party’s Budget, “to end austerity,” on Wednesday February 5th.
Seeming to go one better than the Tories -- by fixing the date, hasn’t seemed to score Labour extra points with contractors’ advisers, as they seem to see any date in February as too early.
'Leaves little time'
“With both major parties promising a February budget, it leaves little time for any government to properly consider whether the current proposed changes to IR35 within the private sector should be introduced, or deferred for more careful consideration,” says Jenner Accountants.
Qdos Contractor confirmed: “Should the Budget take place early on in February, it leaves very little time for various parties to cater for any potential changes in the final IR35 legislation, which could be unveiled only two months before the arrival of IR35 reform on April 6th.
“The worry is that a number of agencies and end-clients might wait until the final legislation is revealed before they start their IR35 preparations. By that time, they would be cutting it fine to be ready for the arrival of changes shortly afterwards.”
Alternatively, they can play a guessing game, hinted AR Tax Accountants, as to what aspects of the draft legislation might or might not make the final cut and be passed into law.
“Contractors should finally get some certainty within the next three months,” said the firm, a specialist in limited company accounting.
“[But at the moment, the] off-payroll [framework] may be delayed due to businesses needing to focus on Brexit and due to all the campaigning [or it] may be watered down slightly, or given royal assent without any changes due to public sector organisations and banks already having policies in place.”
'Government response to hold some changes'
Yet it appears to be less of guessing game to IR35 expert Kate Cottrell. In a statement yesterday, the former tax inspector said:
“We are all eagerly awaiting the Budget so we can get sight of the final off-payroll legislation and the government’s responses to the draft legislation, which I expect will hopefully hold some changes, especially around the proposed ‘small company’ exemption and what constitutes ‘reasonable care’ to name but two.”
A government in a rush however, or under pressure, or constrained by its spending commitments, could make no changes whatsoever. As the Bauer & Cottrell co-founder explained:
“We know the final legislation is ready to go, alongside the government’s responses and HMRC guidance, so it would be easy for any party just to go ahead. This seems likely given the spending commitments made by all the parties.”
'The last thing we want'
Despite opposition to many parts of the draft, another adviser said that changing the requirements so close to their April commencement, with preparations and policies already in place at some companies, was “the last thing” that the government ought to do.
“A number of banks have already indicated that they will not contract with personal service companies, but they [now] may have to change that policy [if further alterations are made]”, the adviser opposed.
Writing on LinkedIn, AR Tax Accountants said that based on posts it has seen, most contractors expected the off-payroll framework to be introduced “without any changes” to what HM Treasury proposed at Budget 2018.
'Not as straightforward'
“[But] it may not be as straightforward as this,” the firm wrote. “Sajid Javid seems to at least acknowledge that this is a big issue for many self-employed people.
“The Conservatives do have a previous form when it comes to milking freelancers, however, and seeing them as cash cows to reduce the national debt.”
Another accountant, Graham Jenner, says it’s not just government but now also clients who contractors probably feel picked on by.
'Legislation rushed through'
“[Due to any February Budget date being close to the April 6th commencement date] we are now in danger of legislation being rushed through which will likely result in contractors outside IR35 incorrectly being assessed as within.
“Worse still,” Mr Jenner added, “[there] will be those who were genuinely working outside IR35 but [get] forced into an employed role, simply because the end-client does not want the aggravation of perceived risk associated with carrying out the status determinations.”
Such unenviable scenarios of being forced onto the payroll – and going along with it, seem more likely if things are left to the last-minute, without preparation or time to consider.
'Messages' to contractors
“Our message to private sector companies - and contractors for that matter - is to work off the basis that reform will be introduced, regardless of the fact that there could be a review of the changes at some point,” advises Qdos CEO Seb Maley.
Similarly in alert last night, Bauer & Cottrell warned: “The key message for contractors, agencies and end-users is loud and clear now – you cannot afford to wait for the [February] Budget and you must prepare for the worst. February 2020 is far too late for making such important IR35 decisions. Take some action now.”