Yesterday marked the Chancellor’s first Spring Statement. Given that we’d previously been told to expect no major policy changes or any drastic fiscal manoeuvring, the lack of any great detail wasn’t a surprise.
The contracting community were, however, expecting to see some kind of announcement on the future of potential IR35 reforms in the private sector. Although there was no mention of such reform in Mr. Hammond’s speech to the Commons, further information released afterwards confirmed that a consultation will be published later this year:
“In the coming months the Government will publish: Off-payroll working – a consultation on how to tackle non-compliance in the private sector, drawing on the experience of the public sector reform. The Government will work with businesses and individuals to mitigate the potential administrative burdens of any future changes.”
So, what does that mean for contractors? Crucially, and most importantly, it opens the window for a proper discussion around the many potential pitfalls that could accompany a private sector rollout.
In characteristically vague terms, the Treasury’s statement that any consultation will not be available until “the coming months”, likely meaning that they are waiting for either the close of the Employment Status consultation in June or the Budget in November, makes the previously mooted April 2019 start date for private sector IR35 changes extremely unlikely, although not impossible, and makes April 2020 a much more likely starting point.
As many within and around the contracting world have noted since the announcement of the delay, a push back is no bad thing. One of the major problems with the recent IR35 reform in the public sector was the fact that a large number of public sector bodies simply didn’t have the resources to properly review all of their contracts.
A delay will give the government time to get that particular house in order. It is essential that they make sure IR35 rules in the public sector are properly and evenly applied before they even consider a similar move within the private sector.
What remains disappointing is that the Chancellor decided not to make any major announcements, or provide any real clarity, in yesterday’s Statement. Whilst the government is unlikely to consider itself behind schedule (having previously noted that the IR35 consultation would be launched “in 2018”) many had been expecting it early in the New Year.
However, given the rumours that HMRC is finding the April 2017 IR35 rules decidedly troublesome to implement, perhaps we should not be surprised at the current lack of certainty. Once again, contractors find themselves in a political no man’s land – no draconian reforms immediately looming, but also no definitive answer on what may await them in the future. Once more, it seems, the key phrase would appear to be ‘watch this space.’
Aside from the IR35 filibustering, the Spring Statement contained a generally upbeat tone around the recovery of the UK economy, with the announcement of continued investment in public services and a number of large-scale infrastructure projects (which will, hopefully, benefit large numbers of contractors working in relevant sectors.)
Of particular note to contractors, announcements were made about a consultation on extending tax relief on training funded by the self-employed, as well as a review into late payments made to small businesses – both highly positive moves in the right direction.
We’ll be keeping a close eye on any further developments or announcements in the coming weeks and months. Stay tuned to the Kingsbridge blog for updates. In the meantime, if you’re looking for the most comprehensive package of contractor insurance on the market why not get in touch? You can reach us on 01242 808740.