REC welcomes delay to IR35 tax changes, but warns more needs to be done to support businesses and workers through the COVID-19 crisis

The government has announced the deferral of the upcoming IR35 tax changes which were due to come into effect on 6 April.

This follows a campaign by the REC and others which highlighted the damage the changes would do to the flexibility of the labour market and the availability of staff as the economy faced Brexit uncertainty. The decision to delay comes as the REC made an additional warning that the changes were unsustainable while businesses were dealing with the impact of the COVID-19 crisis.

Neil Carberry, CEO of the Recruitment & Employment Confederation, said:

“The REC has been campaigning for a delay to IR35 with a wide range of campaign partners and we are pleased to see this news, though we wish it had come in better circumstances.

“There has never been a more crucial time to maintain the stability and flexibility of the UK labour market. This change will ensure that employers have access to high-skilled contractors to manage the forthcoming fluctuations in demand, as the country navigates through the next few months.

“Along with the loan facilities announced yesterday by the Chancellor, these steps go some way to protecting our jobs market. But more is needed. Temporary online Right to Work checks need to happen so that staff can be approved for work as quickly and safely as possible, especially in the NHS. We will need different approaches to ensure safeguarding in health and education.

“We also ask the government to provide support to cover 14 days of Statutory Sick Pay (SSP) for all businesses regardless of staff size. SSP claims are already putting cash-constrained businesses under huge pressure and risking payments to workers when they need it most.”

Chris Biggs is the Managing Director of Theta Financial Reporting commented,

“This postponement is welcomed and will give some respite to thousands of consultants and freelance professional service workers in regards to their own tax situation, but the COVID-19 crisis is causing significant stresses in short terms for self-employed workers. Furthermore, it may be worth asking how many businesses will reverse the considerable efforts they have made to become IR35 compliant for the next 12 months.

“With daily updates from the government, there needs to be greater transparency from businesses and HMRC to ensure every skilled gig economy worker has a backup in place if they are unwell. Companies need to ensure that do not act rashly and protect their employed and contracted workforce to make sure that the professional services sector does not grind to a halt and we lose thousands of fantastic consultants over the course of the next quarter.”