Westminster overrun by hundreds of contractors protesting against IR35

Hundreds of contractors have taken to the streets of Westminster to protest against the “devastating” impact that IR35 reform from April is already exerting on off-payroll workers.

Backed by 12 contractor websites, the protestors sprawled out onto the pavements, roads, verges and steps around Parliament Square, loudly chanting in unison “Stop IR35.”

Banners showing Sajid Javid's face were paraded, stating: ‘One month to save British Contracting – Tell the government to stop the off-payroll tax and save UK jobs and skills.”

'Zero Rights Employment'

Other banners condemned, in capitals; ‘Zero Rights Employment’ – a term to describe the reform’s effect of taxing contractors as employees but with none of the rights of employment.

The culmination of the march saw contractor industry captains including Chris James of accountancy group JSA and Andy Chamberlain of IPSE descend on Portcullis House.

There, influential MPs like David Davis who also want IR35 reform shelved or scrapped lent their support, by meeting the protestors, listening to their concerns and echoing their chants.

'Tin-eared Treasury'

“It was great to have MPs of all parties listening and engaging and backing the calls for a halt to the April roll-out,” says a ‘Stop IR35’ campaign spokesman.

“It’s staggering the way that the tin-eared Treasury are ignoring the UK jobs being lost and the small businesses being forced to close.

“But they certainly couldn’t fail to notice today’s protests and we will keep campaigning until they start to listen.”  

'Disastrous legislation'

To register the protest in writing, a letter calling for a 12-month delay to the April 6th framework was handed in to the Treasury, by Stop The Off-Payroll Tax boss Dave Chaplin.

Another of the letter’s signatories, the FCSA, said last night: “We are proud to support the protest because the proposed legislation changes are fundamentally flawed and are already having a very detrimental impact on businesses and professional contractors. 

“We are seeing some firms opt for cheaper resources overseas and the potential impact on the UK’s economy is significant.  

“Therefore it is essential that we join together to make ourselves heard by MPs who are the only ones with the power to prevent this disastrous legislation becoming a reality.”

The full text of the letter is as follows:

-

Dear Chancellor,  

IR35: The off-payroll tax draft legislation

We are a collection of associations, groups and stakeholders which represent the views of the UK’s self-employed contractors, freelancers and consultants. We are extremely concerned by the devastation already being caused by the forthcoming IR35 legislation, due to hit the private sector in April. We are writing to you now to urge you to suspend the April roll-out, for at least twelve months, in order to prevent the closure of thousands of compliant UK businesses. A delay would also provide time to explore alternative arrangements which would protect the tax base without restricting the flexible labour market and damaging the wider economy.

The draft legislation is already having a catastrophic impact, which you and the Treasury must surely now be aware of. Many large companies (including several major banks, Vodafone and GSK) have announced they will no longer engage contractors out of fear they will fall foul of the notoriously complex legislation. Since then more companies have followed suit. This means genuinely self-employed people are losing work opportunities, while clients themselves are losing vital, flexible expertise. 

Hiring organisations find the IR35 rules just as bewildering as everyone else. That is why they are terminating all their contractor engagements. The simply do not want any involvement in the new IR35 regime. Other organisations have correctly assessed that the only way to avoid a huge tax liability, is to declare that all engagements are inside IR35. This is inevitably resulting in entirely compliant contractor businesses having to close. 

The hiring organisations still need contingent workers to complete projects and it is reported that some companies are avoiding the whole problem and additional costs by engaging contractors in other countries , or that workers are being brought in on Tier 2 visas by abusing the “Intra-Company” transfer rules. There is also a fear that non-compliant umbrella company arrangements are being used to circumvent IR35 which will lead to an increase in the use of disguised renumerations schemes and there could then be a repeat of the awful Loan Charge scandal, something that of course resulted from the original, flawed, IR35 legislation. 

Already many contractors are reporting that they have lost their roles, others are now finding it difficult to find new roles. Many are also facing huge cuts in pay and even HMRC own estimates acknowledge that 153,000 people will see lower pay.  This will cause hardship for some, especially as by its nature, contracting and freelancing already means periods without a stable income.   

What is most worrying of all is that many contract and freelancer workers are effectively being forced into a status of ‘zero rights employment’, where they will be taxed as employees, via PAYE, but without any of the security or benefits of employment, no sick, holiday or maternity/paternity and no pension contribution. This is grossly unfair and must not be allowed to happen. We urge you to ensure that no-one pays taxes as an employee unless they have the rights and benefits of employment.     

It is now absolutely clear that the impact of this ill-considered legislation is very different from the impact predicted by the Treasury and HMRC. With so many unexpected consequences already coming to light, it is now, in our view, essential that the government pauses this legislation before it is too late. 

We completely understand the government must do all it can to ensure everyone pays the correct tax, but this is not the way to do it. Delaying for twelve months would provide an opportunity for us to work with government and other experts on devising more transparent, understandable rules that would protect Exchequer revenue while also enabling the flexible labour market to flourish. 

You personally promised a review of IR35 legislation during the election (as part of the proposed Government review of self-employment) so it was deeply disappointing when the new Government announced that the roll-out was going ahead anyway. Instead of the review of the law, all we have had is a rushed consultation of the implementation of the roll-out, which is clearly not what you committed to. We urge you now to have as proper review of the IR35 legislation as promised and halt the April roll-out to allow this to happen. 

We, the contracting and freelancing sector are ready to sit down and work with you to at last work out how best to recognise contracting and freelancing in the tax system, to encourage dynamic, flexible working and providing skills needed by many UK businesses. We urge you to delay and work with us, before it is too late and the sector – and UK economy – are damaged.  

We look forward to hearing from you,

Stop The Off-Payroll Tax

IPSE

FCSA

ContractorCalculator

FPB

LCAG

ContractorUK

FreelanceUK

Professional Passport

ITContracting

WTT Consulting

PRISM

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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