HMRC delay IR35 reform in the private sector

The government announced at the 2018 Budget that early implementation of off-payroll working reforms for the private sector (otherwise known as IR35) is to be taken off the table. Businesses will instead become responsible for assessing the employment status of the off-payroll workers they engage from April 2020. Given the many shortcomings found within its makeup, this delay is welcome.

Why is this so important?

• The delay in the implementation of IR35 helps maintain business' access to Britain’s flexible workforce. The legislation was complex and, in some cases, it was impossible to determine with any degree of certainty whether it applied.
• The administrative burden businesses would face was grossly underestimated at £7,550. Member anecdotes instead suggested compliance system changes alone would cost hundreds of thousands of pounds per business.
• The lead time on these system changes is normally 1-3 years and early implementation would have caused heavy disruption to business plans.

The CBI will continue to be involved in discussions around IR35 and will champion member views as this develops.