Liz Truss resignation loses the contractor sector a PM who pledged to review IR35

The resignation of Liz Truss deprives the UK contractor sector of the only prime minister to have pledged to review IR35.

But rather than sound remorseful at losing a PM who was sympathetic to its dislike of the Intermediaries legislation, the contractor sector is sounding mixed in its reaction.

A PSC wrote: “One of the contractor sites is headlining ‘Truss resigns, nightmare for contractors.’ Personally I think that’s a thousand times better than ‘Truss remains, nightmare for country.’”

A “delay” in rowing back IR35 reform -- a row back Truss’s government announced then  cancelled without reviewing the 2000 legislation, is now a consequence, the PSC hopes.

'Small price to pay to get shot of Truss'

A specialist in project management, the PSC’s owner believes such a delay would be a “small price to pay” if it meant that the UK does now “get shot” of Ms Truss as its premier.

However there is a fear that with Ms Truss going, any hope of IR35 reform being revoked goes with her, as does any hope her IR35 review will ever be carried out.

Before her resignation, the government clarified it was committed to tax simplification so that HMRC frameworks become simpler for businesses to understand and administer.

The clarification was needed, because one Mini-Budget 2022 proposal so far not U-turned by chancellor Jeremy Hunt is the disbandment of the Office of Tax Simplification.

But on the specific issue of an IR35 review, which was promised by Ms Truss when she was campaigning for the Tory leadership in August, HM Treasury is declining to be drawn,

In fact, ContractorUK asked HMT twice for any date or decisions related to the review, immediately after Monday’s U-turn on the vow to repeal reform, and again on Tuesday, but in vain.

'Deeply unfair'

A former expert witness to a Lords IR35 probe indicates the ‘Truss review’ is a sensible halfway house between the vow to cancel the reform, and the vow to cancel the cancellation.

“Not long ago contractors jubilantly celebrated the proposed repeal of this deeply unfair [revised] legislation”,  began Dr Iain Campbell, who gave evidence to peers in March 2020.

“[But] the unprecedented turmoil that followed the Mini-Budget has toppled both the chancellor who proposed it and now the PM herself.

“Now, it is potentially all to play for again…[as we] know that repeal is possible. We campaigned and secured it once. It's time to contact your MP and do it again,” Dr Campbell urged contractors. “A new government is the perfect opportunity to alter policy.”

'Repeal IR35, save our contractors'

But Rishi Sunak yesterday officially announced his intention to run for the Tory party leadership to replace Ms Truss, and to become prime minister.

If he succeeds, one of the government’s biggest supporters of IR35 reform will return to Downing Street, given Mr Sunak oversaw its launch and repeatedly defended it as chancellor.

But the return to policy-making at the highest level of a politician widely acknowledged to have left limited companies stranded during covid, isn’t stopping contractors from getting their appeals into him now.

Under a LinkedIn update by Mr Sunak announcing he will run for the Tory party leadership, a former contractor -- who quit contracting directly because of IR35 reform, told him:

“Repeal IR35. Save our contractors.

“Save the people that have worked side by side with civil servants for decades to build the public services needed to improve quality of lives and reduce public expenditure. Repeal IR35, it is doing much more harm than good.”

'New prime minister has higher priorities than the off-payroll rules'

Trying to manage expectations is Orca Pay Group.

The umbrella company reasoned: “Truss’s successor is likely to have higher priorities than IR35 and the Off-Payroll Working rules.

“[And in the meantime, remember] HMRC is still actively enforcing the OPW rules. None of the recent drama has changed that.”

'Contractor sector is stuffed'

And ‘no change’ is unfortunately what a technology PM fears the contractor sector will be left with.

“Sunak is pro-IR35, as is Hunt. Labour are pro-IR35 and even worse [than the former chancellor] around dividend taxation,” the PM wrote. “So basically [we are] stuffed.”

Candidates for the role of Conservative Party leader face a 1400 deadline for nominations today, before MPs vote to whittle the candidates down to just two.

'Get on with it'

At the time of writing, there are only two candidates anyway -- Mr Sunak, who easily commands the most support from MPs, and former international development secretary Penny Mordaunt.

Back from the US speech circuit and experiencing a political resurgence, former prime minister Boris Johnson had informally thrown his hat into the ring too, but MrJohnson pulled out of the race last night.

Founder of independent work champion IWORK, Julia Kermode, just wants the new premier appointed so he or she can just get on with running the country.

“I'm so fed up with all this. Please, please, please can we have someone who will bring some stability,” appealed Ms Kermode, a former chief executive of the Freelancer & Contractor Services Association. “I almost don't care who. I just want [our sector] to get on with things, whatever those 'things' might be.”

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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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