Following the Chancellor confirmation in this week’s Budget that IR35 reforms will be rolled out to the private sector, the common verdict emerging from experts representing the staffing and professional contracting industries is that he was right to defer the reforms until 2020, but wrong to proceed with them in the first place.
The Association of Independent Professionals and the Self Employed (IPSE), however, was wholly critical. Referring to the rollout as a “smash-and-grab” approach to the country’s smallest enterprises and “short-termism on steroids”, IPSE CEO Chris Bryce said that the Chancellor had “forced the self-employed into a holding pattern of despair, as they await the introduction of controversial tax changes which could force them out of business from April 2020”.
He went on to say that the reforms would result in long-term damage to the British economy by taxing the country’s smallest and most flexible businesses “out of existence”. The small firms run by many highly skilled contracting professionals, he noted, have served Government and large businesses well, and were now more necessary than ever to provide the specialist talent needed for Britain to navigate its exit from the EU.
Accusing the Chancellor of behaving like a looped recording repeating “go for the self-employed”, Bryce predicted that genuinely self-employed people would be badly affected by the measures, which “will have a chilling effect on entrepreneurialism in the UK”.
The reforms, he added, were profoundly anti-competitive and anti-business, granting large corporations the power to unilaterally change the tax affairs of independent contracting professionals.
Ominously, he warned: “Once these smallest businesses have been forced out, the likes of the Big Four service companies – who don’t have to worry about IR35 – will swoop in and pick up all the contracts.”
Self-employed freelancers, Bryce emphasised, contribute £271bn to the British economy every year and provide the country with one of its most prized advantages – flexibility.
The fight against IR35, he vowed, isn’t over, and IPSE will continue to wage it.
Meanwhile, the Association of Professional Staffing Companies (APSCo) welcomed the news that HMT and HMRC had listened to stakeholders during the private sector IR35 consultation and deferred the changes to April 2020.
APSCo’s Sam Hurley repeated the view, however, that rolling out the changes to the private sector will have an “adverse effect on the strength of the UK’s labour market” as well as the wider economy.
The trade body remains seriously concerned about plans to extend the rules in their current form to the private sector, Hurley added, as they are most unlikely to work in there, especially as genuine fears persist about the inaccuracy of the CEST tool.