• International Workplace
  • 20 May 2020

Calls to delay IR35 reform again are rejected

A call for IR35 reform in the private sector to be delayed until 2023/24 has been rejected by the House of Commons, which means the controversial tax changes will still be rolled out on 6 April 2021.

David Davis MP, who proposed that further changes to IR35 should be postponed by an additional two years, turned to Twitter after the debate, commenting: 

“We were unable to vote on my IR35 amendment this afternoon as the House authorities did not select it. However, Labour were supporting the Government anyway, so we could not win – this time. Watch this space.”

Financial Secretary to the Treasury, Jesse Norman, however, reiterated his desire to introduce the changes next year to address the unfairness that he said currently exists. Mr Davis responded by quoting the recently published House of Lords report, which said:

“They (the IR35 rules) have never worked satisfactorily throughout the whole of their 20-year history. IR35 was the effect of reducing contractors to an undesirable halfway house and they do not enjoy the rights that come with employment yet they are considered employees for tax purposes. In short, they are zero-rights employees.”

These changes will see contractors lose the right to determine their IR35 status when engaged by medium and large businesses from April 2021. This responsibility will be handed to the contractor’s client, with the fee-paying party in the supply chain to be transferred the liability.