The government’s decision to delay the roll-out of IR35 to the private sector for another 12 months has been welcomed by Bristol-based human resources outsourcing specialist The HR Dept.
The off-payroll working rules were due to be controversially introduced to the private sector next month but have been postponed due to growing concerns over the coronavirus pandemic. 
The legislation would have made organisations responsible for determining whether a contractor carrying out work for them should be treated as an employee for tax purposes.
The HR Dept, which provides outsourced HR advice and support for well over 6,000 SMEs in the UK, had long been calling for a delay to the roll-out for all SMEs and has written to the government to urge a re-think on the timing of the new legislation.
It believes that, prior to implementation of new off-payroll rules, there needs to be a fundamental review of employment statuses to provide clarity and simplicity.
The HR Dept HR director Jill Bottomley, pictured, has been leading the company’s work on this issue. She said: “Clearly these are not the circumstances in which we wanted to see a delay to the introduction of IR35 rules to the private sector. However, we certainly welcome the postponement.
“Small businesses will have much to think about over the coming months, as will the Government, of course. I hope that all parties involved take the opportunity to have a serious look at how these rules will affect businesses across the UK.
“We have serious concerns over this whole area. The introduction of IR35 and the problems it poses for the private sector expose a whole raft of more fundamental issues over the employment statuses of our national workforce, the discrepancies between employment law and tax law, as well as the understanding among the business community of such changes.”
The announcement to postpone the introduction of changes to the IR35 legislation to the private sector was made by Steve Barclay, the Chief Secretary to the Treasury, on Tuesday night.
He said: “This is a deferral in response to the ongoing spread of Covid-19 to help businesses and individuals.
“This is a deferral and not a cancellation, and the Government remains committed to reintroducing this policy to ensure people working like employees but through their own limited company pay broadly the same amount of tax as those employed directly.”
Mr Barclay’s announcement came shortly after a Finance Bill Sub-Committee, heard in the House of Lords on Monday.
The HR Dept submitted evidence to the committee before the hearing and Ms Bottomley welcomed input from members which recommended a delay. The legislation is now expected to take effect on 6 April 2021, rather than 6 April 2020.
She said: “The government should carry out a review of employment status, as it has committed to in the Good Work Plan, with an aim to align employment status across tax and employment rules. This may result in changes in definition of employment status – surely this must be defined first, before implementing off-payroll changes, otherwise there will be claims made against one set of rules in process, whilst the fundamental rules themselves may then change.
“In my view, it makes sense to stop the off-payroll process, address employment status definition and only then review IR35 rules, should they still be required, and how they would be applied considering all parties involved.
“Whilst the off-payroll IR35 rules themselves are understandably an HMRC issue, the application and impact need to be considered more holistically.
“The priority should not be what is best for the Treasury, but to understand the potential detrimental impact and cost of claims on SMEs, and indeed all the limited company contractors who may, subject to any changes in definition on employment status, be or not be a self-employed contractor.
“If, as we would hope, there is a fundamental review of employment status and tax and employment definitions are aligned, with the removal of worker status, it would not make sense to carry on regardless with new off-payroll changes. We should define employment status first, with clarity on definitions, then consider any necessary tax changes afterwards.”
