Several Recruitment leaders and business owners from across the UK have provided Recruitment Buzz with their thoughts on the changes to IR35 that were revealed in the 2018 Budget.
Victoria Roythorne, Head of Compliance and Contractor Care, Outsource UK commented on the Chancellor’s decision to implement IR35 in the private sector:
“Today’s announcement applying IR35 to the Private Sector from 2020 has really only raised more questions. Whilst it’s good that the Government has listened to the Consultation responses and has given businesses time to prepare for this change, the fact the law will only be applicable to large and medium firms makes little sense. For a start, what size bandings will differentiate a small or medium firm?
“Hammond said that “IR35 was designed to ensure fairness”, but surely applying complicated legislation to only medium and large sized businesses doesn’t create a level playing field?”
“It is very likely that contractors who are given an ‘inside’ status will look to increase their daily and hourly rates as a direct result, so this legislation could well end up costing firms more as the supply chain looks to recoup costs. So in reality, small firms will no doubt be affected anyway.
“Firms need to go into this legislative change with their eyes open. The difference in how contractors are taxed will have repercussions not only in terms of cost but compliance too. We know that 51% of central bodies found the IR35 rules hard to implement, with 32% of public sector central bodies having difficulty filling roles as a result.
“What is most important is compliance. Firms need to get on board with the changes otherwise they risk not only a financial hit, but losing out on the best talent too. This legislation definitely does not mean that businesses can’t use contractor resource. It does mean that they must be aware of what the changes mean, so that when they do tap into the UK’s talented flexible worker-pool, all parties get the best, most compliant, outcome.”
Colin Morley, Professional Services Director at Harvey Nash Recruitment Solutions:
“Businesses and contractors across the country can breathe a sigh of relief, though not for very long. The Government’s decision to delay the introduction of the new IR35 rules to the private sector until 2020 shows that they’ve listened to the warning of experts and industry leaders: That IR35, in its current state, will hurt innovation, productivity and ultimately the economy. We hope HMRC will take this period to reflect upon the deeply flawed regulation and make the necessary adjustments to support, not hinder, the UK’s business and contractor communities. However, contractors and end users must prepare for the substantial changes afoot, opening dialogue, re-evaluating scope and expanding networks to support substitution.”
Nigel Morris, Employment Tax Director at MHA MacIntyre Hudson comments on Philip Hammond’s crackdown on people claiming self-employed status in the Budget:
“Reform of the IR35 rules is seen as a less politically controversial way to raise money for the Treasury, in the absence of Parliamentary support for an increase in National Insurance Contributions (NIC) from the self-employed.
“What’s concerning is that the consultation this move is based on is too narrow in scope, ruling out some previous options that had real merits. The Government needs to be open minded in how it delivers continued IR35 reform, the public sector roll out has not gone smoothly and it’s important these lessons are taken on board .
“We welcome the move to delay implementation until April 2020, and to limit it to large and medium sized businesses – we could never see that the private sector or HMRC would be ready to implement the changes next year. The change of plan also reduces what would have been an unnecessary burden on small businesses.”