The House of Lords Off-Payroll working : IR35 Report

IR35–the Government’s framework to tackle tax avoidance by those in ‘disguised employment’–has not worked properly throughout its 20-year history.

IR35 came into force throughout the UK in April 2000 thanks to Labour Party’s Gordon Brown the UK’s Chancellor of the Exchequer at the time, who became the longest-serving Chancellor in modern history.

The House of Lords Economic Affairs Finance Bill Sub-Committee urged the government to completely rethink the legislation.

According to Lord Forsyth of Drumlean, Chair of the House of Lords Economic Affairs Finance Bill Sub-Committee.

“However, our inquiry found these rules to be riddled with problems, unfairnesses, and unintended consequences. The potential impact of the rules on the wider labour market, particularly the gig economy, has been overlooked by the Government. It must devote time to analysing all of this. A wholesale reform of IR35 is required.

“The rules were deferred for a year because of the current crisis, but how prepared will businesses recovering from the crisis be to take on this extra burden on next year? The Government needs to think this through very carefully. We call on the Government to announce in six months’ time whether it will go ahead with reintroducing these proposals.”

“Contractors already concerned by these uncertain times now have the added worries of paying more employment taxes and having their fees cut by clients making additional National Insurance Contributions. Also concerning is the number of companies getting rid of contractors in anticipation of the implementation of these new rules.”

Economic Affairs Committee Finance Bill Sub-Committee
Off-Payroll working: treating people fairly

Click to access 50.pdf

1st Report of Session 2019-21 – published 27 April 2020

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