Daisy Cooper MP pledges IR35 review if Lib Dems win General Election 2024

A senior Lib Dem politican has said the Liberal Democrats would review the “scandal” of the IR35 rules.

Speaking on BBC1’s Question Time (QT), Daisy Cooper said IR35 was part of a “raw deal” for the self-employed.

The Lib Dem MP for St Albans up until parliament's dissolution on May 30th, Cooper said: “There’s the IR35 scandal, there’s also the connected issue of the Loan Charge.

“These are different issues but they’re also connected. And we would review both of those.”

'Freelance sector at an all-time-low'

The Lib Dems’ deputy leader since 2020, Cooper didn’t bring up IR35 -- it was asked about by a QT audience member who introduced himself as an IT consultant.

The audience member was objecting to the Off-Payroll Working rules of April 6th 2017 and April 6th 2021, rather than the Intermediaries legislation of 2000.

“Because of this single act from government -- introducing polices like that, the UK freelance sector right now is at an all-time-low.”

The IT consultant continued: “I’ve been out of role for the past three months. I’m a high earner and I contribute a lot to tax.

“In the last two years I’ve contributed over £150,000, but yet I don’t qualify for any benefits.”

'Cross-party push to look at IR35 rules'

After pledging an IR35 review in response, Cooper said a push to “try and get HMRC and the Treasury” to “look at those rules” is already underway, with support from “cross-party” MPs.

Cooper’s words went down well with one user of ‘X’ (formerly Twitter), who posted:

“Thank you Daisy Cooper MP, this is an issue being brought very much to the fore by the Lib Dems.

“[In my constituency] we’ve lost half of our self-employed since 2019; that’s 7,500 votes.”

Del Williams, chief revenue officer at Liquid Friday, is just pleased that IR35 received some prime-time exposure.

“It’s fantastic to hear comments on any issue surrounding freelancers…on any political forum,” he says. “And highlighting the value towards the economy this sector brings.”

'Just make HMRC/Treasury review IR35'

Other social media users aren’t impressed by Cooper’s pledge, even if its explicitness indicates the Lib Dem’s soon-to-be published manifesto will contain the IR35 review pledge.

“Get HMRC and Treasury to look at those rules? They are [both] 100% behind the corrupt IR35 [frameworks],” one ‘X’ user wrote.

Another found Cooper’s words a bit wooly, asking: “What does she mean ‘try and get’ HMRC [and the Treasury to [undertake a] review? [Just] make them review it!”

'MPs genuinely concerned about IR35'

An agency boss who watched the QT episode last Thursday, VIQU’s Matt Collingwood, says there’s a bigger issue in play.

“Here's the real question. Are MPs genuinely concerned about IR35, or are they just pandering for self-employed voters with a general election only [31] days away?” he asked.

IPSE very much hopes it is the former as last week it inserted “Scrap the Off-Payroll Rules” into its newly published manifesto.

The contractor body explains: “The IR35 reforms are anti-business. They are impenetrably complex and are a barrier to growth.

“And in a worklessness crisis, they are directly responsible for keeping one in 10 contractors out of work.”

'Government must scrap the off-payroll working rules'

In its 21-page manifesto, IPSE says whoever wins General Election 2024 “has an opportunity to try something genuinely radical”.

“[Scrap the OPW rules to] encourage, not deter, legitimate economic activity and still protect the tax base,” the contractor body says, adding:

“Rather than forcing people to work in a way that fits with the tax system, we need a tax system that fits with the way people are working, and will continue to work.

“But to do this, government must scrap the off-payroll working rules and work constructively with industry to find a way to tax work fairly.”

'Whoever's elected on July 4th, removing or amending IR35 is doubtful'

Doubting Cooper’s pledge will amount to much, and likely to disappoint not just IPSE but also the FCSA – which on Friday called for an IR35 review and overhaul in a ContractorUK exclusive, is a Linux contractor.

The contractor wrote: “I doubt if anyone who gets elected will remove or amend IR35 -- however great that would be.”

The comment came in an online debate about whether repealing the OPW rules would constitute a tax cut.

The debate was indirectly triggered by Qdo’s Nigel Nordone (writing here), but Jim Harra, the Revenue’s CEO has previously expressed a view too.

(N.B. Nordone, a former tax official, today identifies five IR35 red flags that can lead to an HMRC investigation, here, exclusively for ContractorUK).

Speaking in October 2022, Mr Harra said an estimated £2billion in tax would have “been the cost” had IR35 reform remained cancelled.

Harra was referring to Kwasi Kwarteng’s decision when he was chancellor to repeal the OPW rules, only for the current chancellor, Jeremy Hunt, to U-turn that repeal.

'We can hit one-to-many'

In his 2022 submission to the Public Accounts Committee, Harra also made clear that HMRC prefers the OPW rules of 2017/21 over IR35 of 2000.  

Harra said at the time: “One of the advantages of the 2017 and 2021 response from HMRC’s point of view is that it gives us a smaller number of people whose compliance we have to manage, because we can hit one to many when we go to an engager who might employ 20 or 30 or 50 contractors.”

According to a freelance IT project manager, talk from Britain’s very top taxman of ‘hitting’ contractors is why political parties’ pledges to review IR35 are, he says, “irrelevant.”

In a LinkedIn thread the freelance PM went on: “HMRC are the main problem. And none of the political parties have the guile and/or tenacity to tackle the tax monster head-on.

“Plus, I'm willing to bet that even if IR35 was abolished we'd just end up with something far, far worse.”