Despite IR35 being left untouched by Chancellor George Osbourne’s emergency budget, the coalition government has made the strongest statement yet regarding the future of the ‘disguised employment’ legislation.
The truth is, that Osbourne was largely distracted by wider economic issues as he revealed the contents of the famous red briefcase. Whilst IR35 may be the elephant in the room for the UK’s contractors, for the government it’s merely a squeaking mouse amongst a myriad of screaming klaxons. But, on the day after the budget was announced, small business minister Mark Prisk told the Telegraph that IR35 would be abolished:
“We want to make sure that we could undertake a comprehensive review of small business taxation in a way that makes the need for the current IR35 legislation redundant… But we want to make sure whatever we change is a lasting settlement. One of the problems with IR35 is that it’s a constantly changing set of rules.”
Replacing a complex piece of legislation like IR35 will clearly take time in order to ensure that potential tax loopholes are not opened up, and that contractors and freelancers are not over-burdened with another set of difficult and ill-thought-out employment laws. The crucial thing is that there is a genuine will, from both wings of the coalition government, to replace IR35.
In summary: the good news for contractors is that time is ticking for IR35; the bad news is, we don’t know how much time is left.