No delay to controversial IR35 changes

Grant Prior 4 years ago
Share

Construction’s hopes of a delay to controversial IR35 changes were dashed in the Budget.

The new rules will now definitely come into force next month causing widespread disruption across construction.

Major contractors have been auditing freelancers employed via personal service companies as thousands of professionals are braced for a move back to PAYE.

Current rules allow workers to be employed via a personal service company (PSC) which determines whether IR35 tax rules should apply.

That responsibility will now shift from April to contractors who will determine employment status.

Freelance workers fear they will lose out through higher tax payments while contractors will also face bigger bills from direct employment.

The Budget announcement confirmed: “At Budget 2018 the government announced that it would reform the off-payroll working rules in the private and third sectors from April 2020.

“The government has recently concluded a review of the reform, and is making a number of changes to support its smooth and successful implementation.

“The government believes it is right to address the fundamental unfairness of the non-compliance with the existing rules, and the reform will therefore be legislated in Finance Bill 2020 and implemented on 6 April 2020, as previously announced.”

One contracting boss said: “This is a real headache for us with 20% of our people employed through IR35.”

Another added: “This will go badly wrong. A lot of our engineers are talking about working abroad.

“They also won’t be interested in working overtime and weekends facing 40% tax.

“The government may raise money in extra tax revenue but will lose a lot more in productivity and struggle to find professionals to help build their infrastructure plans.”

Ian Anfield, Managing Director of Hudson Contract said “A growing number of clients have been contacting us after receiving questionnaires and checklists from HR advisors that go way beyond what is legally required.

“The industry is kidding itself if it thinks a checklist and a questionnaire can meet challenges from HMRC.

“Many of these tests will lead to incorrect employment determinations and expose companies to challenge by freelancers.

“Some of the major contractors are confused about the rules, and think it applies to all supply chains not just agencies, employment businesses and intermediaries.

“We are working with clients to ensure they are compliant with the changes.”

Chris Bryce, CEO of IPSE (the Association of Independent Professionals and the Self-Employed) said: “By forging ahead with these disastrous changes, the government risks hollowing out the UK contracting industry.

“Already, many companies across the UK have either declared all their contractors ‘inside IR35’ or scrapped their flexible workforce altogether.

“Understandably, contractors are extremely concerned about this. Many we have spoken to are already seeing work dry up almost entirely, and our research shows at least one in three are planning to stop contracting in the UK.

“The government review of IR35 was recklessly inadequate. Conducted in less than two months, it was not even independently chaired, and its recommendations were ultimately little more than superficial tinkering.

“The changes to IR35 will do serious damage to contractors, clients and the wider economy. We continue to urge the government to rethink this legislation and save the contracting sector while it still can.”

Latest news

Barratt to demolish more homes with faulty foundations

Number of homes to be demolished on Cambridge estate rises from 36 to 83
35 mins ago

Steel contractor William Hare edges back to break-even

Revenue slides a quarter to £165m as firm records £108,000 profit
24 mins ago

Willmott Dixon fails to agree final price for Newcastle leisure job

City council to looks for new contractor as budgets under pressure
1 hour ago

Bidding to start for civil service’s second home in Darlington

Government Property Agency will invite bids in Q4 for major new Government office complex
16 hours ago

Arup and Aecom on board for £1bn Lincolnshire powerline

New high voltage overhead line and substations from Grimsby and Walpole
15 hours ago

Plan in for Stansted airport terminal extension

Original Foster designed will be replicated in 54m extension towards airfield
59 mins ago

Clients consider options after Westridge collapse

£64m turnover contractor now in hands of administrators
1 day ago

Plans in for 800-bed Leeds student and retail scheme

Major scheme will replace The Core shopping centre in the city
2 days ago

Eric Wright Construction returns to profit

Construction division back in the black as strict contract selection pays off
1 day ago

Balfour boss Leo Quinn backs rainbow lanyards

Chief executive vows "visible leadership" on diversity drive
1 day ago

McAleer & Rushe awarded £60m Barking flats job

Work to start in November on near 200 rental homes project
1 day ago

Lancashire Council awards £300m building framework

Carefoot and Conlon secure spots for major building jobs
1 day ago

Housing contractor Real LSE files administration notice

Real LSE part of group formed in 2021 following acquisition of Rydon contracts
2 days ago

ISG clinches £155m Cat D prison expansion

Firm to deliver 780 new places at three existing prison locations
2 days ago

27-storey Salford student tower approved

540-bed student block to be built on former site of McDonalds' regional HQ
2 days ago

Morgan Sindall £48m Dumfries school job approved

Building work to start before the end of 2023
2 days ago

Pagabo starts race for £1.6bn decarbonising frameworks

Two frameworks are anchored by Great Ormond Street Hospital and Hull City Council
2 days ago

Former HS2 chairmen blast plans to scale back scheme

Fears grow for future of UK's biggest construction project
2 days ago

Redrow plans 1,400 home garden village in Rochdale

Construction on first phase could start next year
2 days ago

Bouygues/Murphy JV tipped for £2.3bn Thames tunnel job

Frontrunner emerges for Lower Thames Crossing 4.2km tunnel job
5 days ago

Subbies facing squeeze as main contractors tighten belts

Pay disputes increasing as suppliers fear major contractors returning to "bad old ways"
5 days ago

Portview takes control of Fulham Buckingham stand

Fit-out specialist steps in after main contractor failure
5 days ago

Firefighters probe cause of Leeds modular scheme blaze

Fire broke out in timber frame office job at Citu's eco development
5 days ago

Manslaughter probe dropped after demolition deaths

HSE to now lead investigation of 2019 tragedy
5 days ago

Vinci/McAlpine JV to start £105m NHS rehabilitation centre

Treasury clears New Hospital Programme job to start main construction
5 days ago

First sign of price falls for construction products

Supply returns to pre-covid levels as demand drops
6 days ago

Three giant lab buildings approved at £700m Oxford R&D district

Phase 2 Oxford North office and lab buildings to deliver 460,000 sq ft of space
7 days ago

PM fails to quash speculation about plan to axe HS2 phase 2

Sunak ducks future of HS2 question at big net zero Government briefing
6 days ago

Green light for giant North Wales offshore wind farm

Awel y Môr wind farm is the biggest renewable investment in Wales for a decade
6 days ago

T&T breaks £1bn revenue mark for first time

Global consultant enjoys strong growth across all seven geographical regions
6 days ago

Contractor services