Tory MPs echo Lords’ IR35 reform concerns to Jesse Norman

Five influential MPs have echoed the Lords economic affairs committee’s concerns around IR35 reform to their fellow Conservative Jesse Norman, who last week shrugged them off.

Both in the House of Commons and in a video that he posted online, Sir John Redwood said he wanted to “urge” the Treasury minister to “think again about changing the rules on IR35”.  

“[Limited company contractors] provide flexibility, service and products that we need, and they are very competitive,” the veteran Tory MP said.

“A number of them have been living under the shadow of those tax changes; some have lost contracts and work to overseas companies and overseas competitors simply from that threat.”

'Disadvantaged'

Liam Fox, former international trade and defence secretary echoed: “Some of our most flexible and resilient workers in our economy are in that grouping [affected by IR35 reform.]

“What we must not do in trying to right a wrong is put them in a position where they are disadvantaged”.

Thirdly for the Tories, Saqib Bhatti MP, an accountant by profession, told Mr Norman that the reform’s delay to 2021 was the correct decision, as covid-19 is exerting “serious strains” on the flexible workforce.

'Left behind'

“We do not yet know what the world will look like in 2021," Mr Bhatti said. "So it is sensible that we continue to monitor this [IR35] area, ensuring that our flexible workforce is not left behind.”

Responding to the Treasury minister’s recent ‘reply’ to the Lords inquiry, Sir Graham Brady cited the government’s promise to conduct research into the public sector IR35 reforms. 

“I hope that ministers will also take the opportunity to look at whether more could be done to achieve proper clarity of definition between contractors and employees,” the Tory MP said.

'Ill-defined'

Brady, who was the chairman of the 1922 committee and a recent candidate to run the party, also said he believes the term ‘worker’ is “ill-defined” and “causes considerable confusion.”

The Taylor Review, which in 2017 confirmed such confusion and tabled how to clear it up, is acknowledged in the Lords inquiry as the “best long-term alternative” to the off-payroll rules.  

Sounding unsure if the government’s response to the review, the Good Work Plan, is the answer that its clients want the government to go with, contractor status advisory Qdos said:   

'Forcing contractors closer to employment'

“On the one hand, many contractors we speak with want rights when working inside IR35 -- which is totally logical. Paying employment taxes but receiving zero rights doesn’t stack up.

“On the other hand, there’s the argument that these changes [in the plan], could mean genuine contractors -- who do not consider themselves vulnerable workers and not in need of protection -- are forced closer to employment.”

Getting independent workers closer to the payroll would meet the government’s aims, partly because it’s easier for HMRC, and partly because it believes they are disguising employment.

'Contractors are tax-motivated, so they're fair game'

Rebecca Seeley Harris reflected on her assessment: “References [by the Lords] to the Taylor review and the gig economy are dealing with a different sector -- those who are not so well paid.

“For the contractor population the government thinks they are TMIs -- 'Tax-Motivated Incorporations' and therefore, fair game.”

The ReLegal Consulting founder added: “Of course it’s not right that PSCs pay tax and get no benefits or employment rights but, the point is that the government doesn’t want people working through PSCs and this [reform] is one way to deter them.”

'Fiddling aroud the edges with IR35'

At the second reading of Finance Bill 2020, where the Tory MPs were speaking, the government said it would introduce an amendment so the reform could go ahead from April 2021.

Tory MP Steve Baker, a trained engineer who used to work as a consultant, is unimpressed.

“I am not surprised that the bill has to fiddle around at the edges with such things as IR35, because we are at or beyond the taxable capacity of the British economy.

He added: “The government are having to go where in other times they might not; they might simply raise ​other rates.”

'Key time for lobbying your MP coming up'

Referring to the bill’s 2019 Loan Charge provisions, but equally relevant to IR35 provisions in light of the objecting Tory MPs, the lobbyist LCAG said: “It is at Report Stage, the stage after Committee Stage, that ...[we] hope supportive MPs will table amendments.

“We envisage the run-up to this being the key time for activity when we will need everyone lobbying their MP. The campaign team, volunteers and…[others] are all working hard”.

Sir John Redwood appealed: “The [Treasury] minister [ought] to think again and recognise that we need to reward and encourage those people [like contractors who work flexibly], not threaten them with a new tax. Above all they will offer a lot of the flexibility, hard work and energy that the recovery will need.”