Autumn Statement 2022: Jeremy Hunt delays Medium-Term Fiscal Plan but upgrades it, sparking IR35 review hopes
Jeremy Hunt has delayed his Medium Term Fiscal Plan 2022, which was scheduled for October 31st, by two-and-a-half weeks.
In a move that advisers to contractors told ContractorUK that they welcome, the chancellor yesterday said his Halloween statement would be postponed until November 17th.
To be upgraded to a “full Autumn Statement,” Hunt explained the reason for the delay was so policy decisions could be based on “the most accurate possible” figures and forecasts.
In an arranged announcement to the media, the chancellor also said that he and new prime minister Rishi Sunak agreed to the delay together, and that delaying is “prudent”.
Experts in contracting agree. “I actually welcome the tax and spending plan being pushed back,” James Trowell, managing director of Tax Ninja began in a statement to ContractorUK.
“Mini Budget seemed rushed and pushed out to the media at haste.
“I'd much rather wait for a considered, well thought out approach to the UK's tax and spending plans. The UK people could clearly see that the Mini-Budget was ill-conceived.”
'Chaos, U-turns, now hopefully surety'
David Harmer of Markel, says the chancellor delaying his statement should allow “time for consideration” and “much-needed surety,” following policy “chaos” and tax “U-turns”.
“Given the [effects of] Mini-Budget…it’s not surprising this has been pushed back,” Mr Harmer, the tax consultancy’s associate director of contractor solutions told ContractorUK.
“[Nonetheless], we consider the delay to be a positive move…[to] hopefully provide some much-needed certainty to the contractor market.”
Contractor accountant Chris James suggests he is among those who almost saw the delay to the Medium-Term Fiscal Plan coming.
“Given we got a new PM yesterday,” he posted last night, “and the identity of the chancellor was only reconfirmed later that day, it's not surprising”.
A director at Workwell, Mr James added: “It will now have the more normal status of an Autumn Statement, and will hopefully contain all the news in one go…[unlike] recently”.
'New PM oversaw IR35 reform'
The accountant’s jab refers to the fragmented medley of tax announcements affecting their livelihoods that contractors and other taxpayers have had to adapt to.
Notably, Mini-Budget 2022 wrongfooted the many by falling on a Friday; being delivered in the morning, and then getting torn up just 24 days later in an impromptu televised address.
Trowell believes the surprises, good and bad, are probably over for contractors for now.
“Although I welcomed the IR35 reform repeal [pledge], I’m not sure we will see that again,” the tax accountant said yesterday.
“Remember, the new PM previously oversaw the reform as the chancellor and during covid, he somewhat ignored financial support for PSCs. I see it [as] unlikely [too] that we will see even a review of IR35.”
But the upgrading of Mr Hunt’s statement to full budget status makes Markel’s Mr Harmer think that potentially, something more significant could be in the works.
“We do not believe this delay signals yet another U-turn [on IR35], as aside from any other consideration, the off-payroll legislation seems to accord with the current PM and Chancellor’s economic ideologies.
“What we could see, however, are proposals to consult on the current off-payroll legislation,” he said. “[This review could test] whether it achieves the result intended by the government.”
'Small company exemption could be consulted on'
Harmer cautions that such an IR35 review could see all options on the table – including those contractors won’t like but were predicted on the eve of Mr Sunak’s last budgetary statement as chancellor.
An IR35 case law buff, Harmer told ContractorUK: “Part of [any new off-payroll] consultation could be to improve the current legislation and attempt to deal with the administrative complexities.
“But it could [equally] see… proposals to roll out [the April 6th 2021 framework] to all private sector engagers and [thereby] dispense with the ‘small company’ exemption.”
Harmer acknowledged that his comments were “speculative.”
His comments also follow warnings by another status expert that in light of criticisms of HMRC’s grasp of IR35 reform implementation, extending the 2021 framework to small companies would be “madness.”
Yet a ContractorUK reader yesterday tweeted Mr Hunt and Mr Sunak directly hoping Harmer has got it right -- that Autumn Statement 2022 does contain an IR35/off-payroll review.
'Umbrella market cowboys putting contractors at risk'
“The average joe in the UK…[might not care about] IR35] -- only the contractors that it affects [do]. But I’m still hoping you Mr Sunak and you Mr Hunt reconsider it”, he wrote.
Lucy Smith, managing director Clarity Umbrella cautioned: “I think [anything on IR35 – such as the complex repealing the repeal of the repeal] is highly unlikely at this stage.
“Let’s hope [instead] that the government starts to reconsider regulation of the umbrella market to prevent the cowboys from putting contractors at any further risks.”
But inniAccounts CEO James Poyser says don’t get your hopes up – about any of it.
“Personally, I'm not getting my hopes up of any substantive [IR35] review for a couple of reasons. First the OPW reforms happened on Rishi's watch, so I can't imagine he's about to make any U-turns.
“Second, let's not forget it was [recently resigned prime minister Liz Truss who promised the review [of IR35], not Rishi, and anything that Truss said or did will now be treated with deep suspicion. So I suspect this [IR35 review]ship has now sailed for another year or so.”
Also the boss at off-payroll.org and co-founder of the Fair Umbrella Campaign, Mr Poyser continued in a statement last night to ContractorUK: “I wouldn't get your hopes up about umbrella legislation either.
“The government has got its work cut out trying to get the economy back on an even keel. On IR35 though, it is a vote-winner however, for being [of interest to] the party's core demographic. So perhaps if the Tories are still behind in the polls as we get close to the January 2025 general election, we may start to see some movement. Or thinly veiled promises, at least.”