Concerned that the impact of planned changes to off payroll working rules or IR35 has not been fully assessed, the House of Lords Finance Bill Sub Committee has launched an inquiry.
The planned changes will require private medium and large organisations which engage a sub-contractor to determine the status of that sub-contractor for tax purposes, deduct tax and national insurance contributions (NICs) from payments to any sub-contractors deemed to be employees and pay employers NICs. Public sector organisations have had this responsibility since 2017.
The inquiry will be welcomed by the private sector, who in less than 2 months are expected to implement the planned changes.
The Sub-Committee has called for written evidence to be submitted before 25 February 2020. It is interested in:
- How the new rules have been working in the public sector
- Whether the impact of the new rules on the private sector and the compliance burden has been adequately assessed
- How confident small organisations can be that they are excluded from the provision
- The impacts on a chain of contractors and subcontractors
- Whether the employment status tests are clear and understood, including HMRCs Check Employment Status for Tax (CEST) tool
- Whether there are adequate safeguards to allow decisions to be challenged
- Whether the planned changes meet the governments objectives
- The impact on umbrella companies and the gig economy
The Sub Committee will review the submissions and make recommendations in a report to the House of Lords.
Lord Forsyth of Drumlean, Chair of the Finance Bill Sub Committee said:
““To inform our work we want to hear from as broad a range of people and organisations as possible. If you have a view on off-payroll working rules, please let us know what you think.”
Meanwhile the Treasury continues to stress that it has no plans to delay the introduction of the new rules from 6 April, despite not yet concluding and releasing its own limited review due in the middle of this month.
Craig Simpson, Tax Partner at Bates Weston comments on the Lords IR35 inquiry:
“The pressure is building on the Government to at least postpone the planned changes in off payroll working rules. The House of Lords Finance Bill Sub Committee have rightly raised concerns about the impact assessment of the changes. Given that the Budget is delivered on 11 March, the subsequent Finance Bill, which will contain the legislation for these rules, is likely to be published only a matter of weeks before the rules come into place on 6 April.”
