back to article UK government puts IR35 tax reforms on hold for a year in wake of coronavirus crisis

Heads up, IT contractors: the implementation of Britain's IR35 controversial tax reforms have been delayed by a year due to the coronavirus pandemic. The decision was announced among a £330bn financial package for the UK economy that includes a business rate holiday, emergency loans for companies, and financial assistance to …

  1. Anonymous Coward
    Anonymous Coward

    Better than nothing

    It's a pity the government aren't cancelling this altogether but a year's delay is definitely a good start!

    1. Anonymous Coward
      Anonymous Coward

      Re: Better than nothing

      I’m not sure how much this helps.

      I speak as someone who has already declined to extend my contract (and left) because the company was applying a blanket “you’re all inside IR35 and we will not allow substitution and there is a mutuality of obligation” etc etc. Is this same company now going to go back to allowing us to work under our old outside IR35 contracts that explicitly stated the opposite? Hardly. So they’ll probably have to change how they engage contractors anyway. And how many companies, who have already made IR35 policy changes, will be willing to unpick this sorry mess with only a 12 month delay? It’s too little, too late.

      So as far as I can see, I’m still in the same boat, along with many colleagues who have already left, some of whom have started the process of shutting down their limited companies (for a fee, of course).

      Hopefully there will be more new outside IR35 contracts available, but then we’ll have this sh*tshow again next year. If companies haven’t sorted it out with 2-3 weeks to go to April 6th, what are the chances after a 12-month global pandemic? Slim to none I reckon.

      1. LucreLout Silver badge

        Re: Better than nothing

        So as far as I can see, I’m still in the same boat, along with many colleagues who have already left, some of whom have started the process of shutting down their limited companies (for a fee, of course).

        Hopefully there will be more new outside IR35 contracts available, but then we’ll have this sh*tshow again next year. If companies haven’t sorted it out with 2-3 weeks to go to April 6th, what are the chances after a 12-month global pandemic? Slim to none I reckon.

        Sorry to be the bearer of bad news in these times of woe, but you've nailed it.

        My company (big bank you have heard of) isn't changing our stance- we simply don't have budget for the few remaining contractors we didn't make FTE or who didn't already leave when we insisted on converting them.

        There's no way we're looking at the budget process again this close to financial year end, and most certainly not with the current pandemic.

        1. Wibble

          Re: Better than nothing

          And the unfortunate sods who were 'converted' to full time employees can be sacked as they're "new employees".

          As opposed to laying off all the contractors as they bare the risk of self-employment, i.e. they are contractors so aren't subject to employee regulations. Yet the HMRC couldn't give a damn about that crumbled 'pillar'.

    2. HollyHopDrive

      Re: Better than nothing

      I (like a lot of other contractors) have been forced to take a PAYE role because of the mass blanket bans, however, I don't think we are the people the chancellor is trying to help. This (and most of the measures) are about taking some burden away from the medium and BIG business when a massive economy problem is happening and they are about to see much bigger tax losses. If we think anything they said yesterday is about small one man bands & contractors I think we are all mistaken.

      From a contractor point of view we are in the same boat. I've had to take a PAYE role, it's all that was about. I'm essentially on zero days notice, zero hours contract. And I'm pretty sure companies are going to start throwing us all overboard pretty shortly when they try to stem their loses in this clusterfuck economy.

      IR35 is a hammer to crack a nut of hidden employees. And to some extent its probably right, for eample delivery drivers that HAVE to rent the van from the company and have strict rules on how they can behave. These people deserve better protections, and I support that. But we all know all they have done is let the companies get away with it and pushing us under and umbrella companies and has given us zero rights and all the tax liabilities. And if any contractor feels this is a glimmer of hope then I hate to say, I think we may be wrong. I hope I am, but I see little to think this is anything other than a bit of large company relief because everybody is a bit busy at the moment tying not to go broke.

      IR35 is coming back as and when the economy is back and they need to raise tax to pay back all the money they just let off big businesses. I also think most companies that blanket banned PSC's are unlikely to change their policy for essentially a year. They've done the work and deals with all the agencies. I'm sure they aren't going to bother unpicking that mess either. Bigger fish to fry as they say.

      1. sabroni Silver badge

        Re: I'm essentially on zero days notice, zero hours contract.

        You've managed to get a permanent role with none of the benefits of a permanent role? How did you manage that? The law provides those benefits.

        1. jzl

          I actually own one

          Because you become your own employer, essentially. Umbrella companies provide sick pay and holiday pay using accounting tricks from your own daily rate.

          Sick pay is no more than statutory, and it comes from money held back from your daily rate. IT staff in real full time employed positions would expect sick leave at full salary (normal for a professional role). Paid holiday, again, simply comes from withholding a portion of your daily rate and labelling it "paid holiday".

        2. HollyHopDrive

          Re: I'm essentially on zero days notice, zero hours contract.

          Because the umbrella company I'm actually employed with give you fuck all rights. All contractors have to use that umbrella company. Take it or leave it and there isn't much about at the moment so beggars and choosers.

          We get statutory sick pay, 3% pension after 90 days and only accrue holiday against hours we've worked. If we want holiday before we've accrued it we have to take it unpaid even though we have a 4 month fixed term employment contract. If I was perm with the company I actually work for, 6% pension, 25 days paid holiday, bonus, 12 months full sick pay, health, share options etc etc. But they just want a short term resource (me) but they don't want to give me any of that. I used to be able to provide all that for myself, not anymore the chancellor has that bit as additional tax under the guise of panic IR35 implementation.

          The house of lords essentially pointed out that tax law and employment law don't align, but the government essentially gave a shoulder shrug. It doesn't care. This is the flexible work force they want. Zero rights (we can't go on strike can we?) but lots of tax. Works for them, they don't care about the man on the street.

          1. Sgt_Oddball Silver badge
            Coat

            Re: I'm essentially on zero days notice, zero hours contract.

            I'm sure I've heard something before about Umbrella companies and issues with sick pay (or just viruses in general)..

            Since when has this current government given a hoot about the little guys anyway? From allowing the sale of all railway arches (beloved of many a small business) to the complete absense of support for businesses below 100 members of staff in the COVID-19 panic and that's before we mention Universal (dis)Credit. IR35 is just another symbol of that callousness from our apparent betters.

            Mines the one with the S.T.A.R.S. patch on the back.

            (yes, yes I'm going already. We're supposes to social distance ourselves after all)

      2. Anonymous Coward
        Anonymous Coward

        Re: Better than nothing

        "forced"? Were you held at knife or gun point?

        1. Anonymous Coward
          Stop

          Re: Better than nothing

          "forced"? Were you held at knife or gun point?

          Don't equate having little choice in doing something solely with the imminent threat of sudden death. There are plenty of bad, but non-fatal, things that can oblige you to take a particular course of action. e.g. I expect you are forced to pay taxes and obey various pettifogging laws and social conventions, but the Government would not actually send someone round to kill you if you didn't. But you still do them because you fear the consequences of not doing so.

      3. Doctor Syntax Silver badge

        Re: Better than nothing

        "And to some extent its probably right, for eample delivery drivers that HAVE to rent the van from the company and have strict rules on how they can behave."

        Those of us with long enough memories can remember that this was the sort of thing IR35 was supposed to clamp down on. Allegedly. Odd that it never turned out that way.

  2. Anonymous Coward
    Anonymous Coward

    IR35. Aren't we forgetting something...

    The DWP calculations are calculated retrospectively on this. (less a year at best).

    1. NeilPost Silver badge

      Re: IR35. Aren't we forgetting something...

      Another year to save up to pay fair dues.

      I suppose the Contractors who have spaffed their money on a Porsche Macan instead of tax/NI and a holiday/sickness/PHI fund will have something to barter for food when the CV19 Zombie Apocalypse clicks up a level.

  3. Dave 15 Silver badge

    Is this an admission?

    Putting it off suggests that they have finally worked out just how stupid and damaging it is, better not kick the economy in the nuts when the virus has floored it. I suspect it will get quietly dropped over the next months

    1. katrinab Silver badge
      Unhappy

      Re: Is this an admission?

      I suspect not. They just don’t have the resources to enforce it right now.

      1. Miss Lincolnshire

        Re: Is this an admission?

        take it from me, an ex HMRC employee, they never have had the resources.

    2. Doctor Syntax Silver badge

      Re: Is this an admission?

      They may also have worked out that there's more to employment conditions than their few factors. When client companies have been forced into large-scale handing out of SSP to actual employees it would be difficult to defend the notion that that the freelancers who are dependent on their own businesses for this are really disguised employees. Normally it's a minor consideration that can be swept under the carpet; suddenly it's not.

  4. This post has been deleted by its author

  5. Jon F

    El Reg, can you please look into whether this will actually have any economic impact? Logic suggests not given all businesses were planning for it to start imminently.

    1. Dr. Mouse

      My client, a fairly large consultancy, is fairly ticked off right now. They have spent the last 6 months planning, assessing contractors, negotiating with clients, engaging lawyers etc. so they could keep as many of the outside IR35 contractors they currently engage. They've paid for insurance policies against the assessments, which were carried out by outside specialists. One pretty senior member of staff has been dedicated to preparing for this fuster cluck reform for that entire 6 months!

      OK, some of this effort can be carried over to next year. However there are many parts which can't be.

      1. NeilPost Silver badge

        So just continue as planned. It’s just a deferment.

        HMG will have a £1tn black hole to fill after the CV19 Apocalypse is over. If it isn’t, no worrying about tax. See Into the Badlands on Amazon PV as a guide.

        1. Dr. Mouse

          "So just continue as planned. It’s just a deferment."

          A large part of this has been assessments for all the contractors. Most of these will not be there next April. Even those who are will probably have to be assessed again, as their roles and circumstances may have changed over that time. Therefore all the effort and money they put into doing this the right way, individually assessing each contractor on their own specific role and circumstances, is likely wasted.

          1. Roland6 Silver badge

            >Therefore all the effort and money they put into doing this the right way, ... is likely wasted.

            If the senior staff are half decent consultants, they will be able to translate all that work into learning and this into an IR35 service proposition to their clients...

      2. Anonymous Coward
        Anonymous Coward

        >My client, a fairly large consultancy, is fairly ticked off right now.?

        How many consultancies/SI with more than one employee (ie. don't satisfy HRMC's definition of a Personal Services Company) have HMRC taken to task for IR35 infringements since 2000?

        It would be nice if HMRC does get real and decide that what actually matters is whether the role as defined and enacted determines IR35 in/out status, not the size of the business contracted to perform the role and so take themselves to court for historical IR35 infringements dating back to pre-Aspire days....

  6. Anonymous Coward
    Anonymous Coward

    Great

    Now please also abolish Coronavirus.

    1. Anonymous Coward
      Anonymous Coward

      Re: Great

      ... and close all the state schools until they're safe for mass gatherings.

      .... most of the fee-paying Public Schools outside state control are already closed.

      1. Anonymous Coward
        Anonymous Coward

        Re: most of the fee-paying Public Schools outside state control are already closed.

        That's worth 15 grand a term.

        1. BebopWeBop Silver badge

          Re: most of the fee-paying Public Schools outside state control are already closed.

          Canny business people - they will still be charging a 'holding fee'

  7. MountainBob

    So they know it’s damaging...

    Too little, far too late.

    Companies have already forced a lot of contractors out, I myself finish this week and with the global pandemic, there is zero chance of renegotiating to extend it further. Companies are now implementing spending freeze as for them and the economy as a whole, winter is coming.

    But clearly the IR-35 chancellor realised the negative effect of the policy, else why else delay it? And yet apparently, it was all about “fairness”.

    Slow clap to the HMRC and the government. My business and thus I, and a very great many of others, are now out of work for the foreseeable future.

    Bravo.

    1. Anonymous Coward
      Anonymous Coward

      Re: So they know it’s damaging...

      But in fairness, would you rather want to run the gauntlet of travelling into work by virus-infected public transport and then onto the infested open plan office ?

      1. Anonymous Coward
        Anonymous Coward

        Re: So they know it’s damaging...

        >But in fairness, would you rather want to run the gauntlet of travelling into work by virus-infected public transport and then onto the infested open plan office ?

        Not seen the pictures in the news of "rush hour": 1~2 people per carriage on the underground.

        A client has closed their offices, we've convinced them to let us have access: no employees means a small team can do a complete (data and power) IT infrastructure upgrade in less time than a larger team would complete the same job normally. Basically, normal out-of-hours working can be performed during "normal hours". If you've watched a team of cable installers and IT network experts, you'll note that their normal social interaction mostly satisfies the "social isolation" criteria.

        Thus currently I'm working in an open plan office, normally occupied by 50 people, with 3 others and getting paid...

      2. Roland6 Silver badge

        Re: So they know it’s damaging...

        >But in fairness, would you rather want to run the gauntlet of travelling into work by virus-infected public transport and then onto the infested open plan office ?

        That's normal life (ie. running the gauntlet of travelling into work by virus-infected public transport and then onto the infested open plan office), the only difference is today that there is the potential to pick up SARS-CoV-2. [Yes, the virus is officially catalogued as SARS-CoV-2, the disease it causes is Corvid-19.]

        1. Anonymous Coward
          Anonymous Coward

          Re: So they know it’s damaging...

          With a 7.5% mortality rate in Italy now?

          No thanks. I'd rather stay at home.

          1. Anonymous Coward
            Anonymous Coward

            Re: So they know it’s damaging...

            Citation ? I'd take mortality figures with a very very VERY large handful of salt - especially if they've come from a source (e.g. most of the mainstream media, most of social media) which relies on sensationalism/fear to sell copies/page impressions.

            It sounds simple - divide number of deaths by number of infections, right ? Wrong. Because we don't know the latter figure, only the number of clinically confirmed cases which is itself only a tiny fraction of all cases. To put this in perspective, on Monday we got a briefing that at the site I'm based in, there had been two clinically confirmed cases, but another couple of dozen assumed cases that were self-isolating - and that the local hospital is no longer testing people due to the time needed and the numbers involved. So a 7.5% figure derived from "clinically confirmed" cases would amount to somewhere between that, and only around 0.5%. Obviously on such a small sample, the numbers are meaningless, but do illustrate that the figure for "number of infections" is really hard to get a handle on, and even small changes in guesstimate can have a big impact on the calculated mortality rate.

            If you want to be silly, I could say that last year during flu season, of people I know who had it and were hospitalised - the mortality rate was 50%. That's on the basis that I know two people (both family members) and only one came home. Again, it's a silly metric derived from a small sample size and invalid numbers - but I hope it demonstrates the challenge in providing such statistics.

            So until you can get sensible numbers for all the people who caught it but didn't get symptoms (they'll be some), all those who simply stopped at home till the sniffles were gone (but weren't counted anywhere), etc, etc, etc, it's impossible to actually calculate a mortality rate.

            So you have to guesstimate. And don't forget that the mortality rate for the normal seasonal flu is not insignificant. And that many (most ?) of the deaths are of people who are otherwise compromised - so a healthy person without any health problems should get a week or two of "feeling like crap" and then be fine, with the added bonus of having developed a natural immune response to further exposure.

            And for anyone who's not read between the lines or otherwise had it explained to them. The current advice is not based on preventing people getting it at all - it's about slowing the spread so that the numbers needing medical treatment at any point in time stay low enough to deal with. Anyone not exposed at all will still be at risk next time it comes around - such as part of next year's seasonal flu.

            PS - part of the day job (in engineering, not in the health area) involves collating numbers and assessing "do these look plausible ?". So I am usually sceptical of statistics (especially headlines) unless/until I can see where they came from - knowing how easy it is for an "inaccurate" number to feed through into a nonsense calculation result.

            1. Stork Silver badge

              Re: So they know it’s damaging...

              Two more complications for the stats:

              - how many pneumonia deaths the last couple of months in US/Europe have been tested for Corona virus? Far from all is my guess.

              - At the moment number of infected (no matter what they actually are) are without doubt rising rapidly. The one who die only do so 10-14 days later

            2. Doctor Syntax Silver badge

              Re: So they know it’s damaging...

              You're compensating in one direction - the unconfirmed cases vs the confirmed. You also need to take into account that some of the current cases are current because they haven't died yet. The death numbers will lag by a few days. Also some of those who have symptoms may actually have a different infection. What's actually needed is to look at the deaths as a percentage of those confirmed as having had the disease and are now clear.

              1. Anonymous Coward
                Anonymous Coward

                Re: So they know it’s damaging...

                If the onser of death lags by more than a couple of days, then you have to compound up the Mortality rate to account for the extra days, perhaps by 25% to 33% for each additional day, so it could actually be a lot higher than 7.5%.

                1. Stork Silver badge

                  Re: So they know it’s damaging...

                  To complicate further: some places like Germany (but I am sure there are others) don't do postmortem tests. If capacity is limited, it may be more important to test those you can help and who may infect others

        2. Kubla Cant Silver badge

          Re: So they know it’s damaging...

          I think the disease is COVID-19. "Corvid-19" is some kind of crow.

          1. Roland6 Silver badge

            Re: So they know it’s damaging...

            >I think the disease is COVID-19

            Yes that is the official name, however you will see both the mainstream media and social media also using #Corvid-19., my mistake in not double checking what I was actually typing...

      3. Anonymous Coward
        Anonymous Coward

        Re: So they know it’s damaging...

        Yeah 'cos in IT we haven't had work-from-home capability for years...

        1. The Oncoming Scorn Silver badge
          Facepalm

          Re: So they know it’s damaging...

          My former employers (having got rid of the dedicated team), now find themselves, with "half" the available support team to:

          Prepare laptops for staff to work from home.

          Update & return laptops from equipment technicians kicked out from closed technical colleges.

          Flooded with support requests as staff didn't follow\setup the new two factor authentication for remote access by VPN last year.

      4. MountainBob

        Re: So they know it’s damaging...

        Seeing as I will almost certainly catch it at some point anyway, I'd rather risk it than be out of work in an economy rapidly being brought to its knees.

        Besides, as a contractor it takes lot for me not to turn up to work. I don't benefit from cushy benefits like them perm folks.

        Obviously the government is all about the "Fairness" though, so I look forward to those benefits kicking in real soon....

    2. Doctor Syntax Silver badge

      Re: So they know it’s damaging...

      "Companies have already forced a lot of contractors out, I myself finish this week and with the global pandemic, there is zero chance of renegotiating to extend it further."

      It would depend on circumstances of client companies but those who need to keep trading and are having staff shortages could find themselves needing to engage extra help.

  8. One-nation give over
    Mushroom

    One-nation Barmy

    So whilst normal every day people are facing the financial implications of the Coronavirus, worrying about paying mortgages and being made redundant, the government feels it necessary to prop up highly paid consultants tax avoidance, is this the one nation that has been mentioned so many times....

    1. Dave K Silver badge

      Re: One-nation Barmy

      So contractors don't also have bills, mortgages, families to support etc?

      In times of Coronavirus and the uncertainty of work, contractors are in a far more perilous position than employees as contractors have no legal protections for the work they do and can be easily let go at a moments notice.

      Also, it's worth noting that IR35 targets contractors doing pretty standard work, ie IT support, delivery drivers and whatnot. Those doing specialised consultancy work on short-term contracts often fall outside of IR35 scope.

      And just to note, I say all this as a full time employee myself - I'm not a contractor.

      1. LucreLout Silver badge

        Re: One-nation Barmy

        In times of Coronavirus and the uncertainty of work, contractors are in a far more perilous position than employees as contractors have no legal protections for the work they do and can be easily let go at a moments notice

        Not really, no. That's not to crap on the Ronin, only to point out that unless you are willing to go to court to enforce your rights, they don't really exist. And if you do go to court to enforce your rights, you'll never pass a background check again - everywhere in finance has a tick box for "Have you ever sued your employer?" and do a thorough background check on FTEs.

        You might, might, get away with it if your name is John Smith and you live in a large city, but if your name is Englebert Presley-Jones III and you live in littleshire, then you're pretty much screwed.

        If employment rights are to mean anything, then people need to be able to file claims without their identity ever being made public.

        1. Alan Mackenzie

          Re: One-nation Barmy

          If employment rights are to mean anything, there needs to be a criminal process and jail time for anybody who violates them.

      2. One-nation give over

        Re: One-nation Barmy

        Yes we all have bills etc to pay, but some also pay the correct taxes whilst others.....just to note, I have worked as both contractor and perm.

        1. JamesPond

          Re: One-nation Barmy

          "but some also pay the correct taxes " which implies as a contractor you didn't pay the correct taxes.

          I'm currently inside IR35 but when outside, I paid corporation tax, employers NI and VAT, all the taxes I was legally obliged to pay.

          1. Anonymous Coward
            Anonymous Coward

            Re: One-nation Barmy @JamesPond

            You didn't pay the VAT, you merely passed on the VAT that you charged, and in fact, if you had used the flat rate VAT scheme without actually buying stuff, you might even have profited from that.

            I do know contractors who have paid themselves just as salary without any bonuses or dividends. but most contractors who use dividends and/or spouse payment do escape more NI and tax than the corporation tax they pay, albeit not as much as most permies think.

            1. Anonymous Coward
              Anonymous Coward

              Re: One-nation Barmy @JamesPond

              And permies can also but non VAT foodstuffs and chose to never buy VAT food stuffs. Would that also be "escaping tax" as you put it?

              Choosing what and how you live your life is not "tax avoidance", it's making a legal and allowed choice.

            2. Doctor Syntax Silver badge

              Re: One-nation Barmy @JamesPond

              "I do know contractors who have paid themselves just as salary without any bonuses or dividends. but most contractors who use dividends and/or spouse payment do escape more NI and tax than the corporation tax they pay"

              A sensible approach is to take out a regular salary but at a scale which enables you to build up a surplus against non-billable time for any reason. "Any reason" includes sickness. It also means being out of contract. A call from an agent starts off with "Are you available". That instant availability that clients are looking for costs because it means being out of contract and having been out for maybe some time. When a sufficient buffer is built up then the company can distribute dividends.

            3. Mike 137 Silver badge

              Re: One-nation Barmy @JamesPond

              "most contractors who use dividends and/or spouse payment do escape more NI and tax"

              It's worth considering that many shareholder directors of larger companies divide their pay between salary and dividend, and employing your spouse is in principle no different from employing anyone else in business terms.

              What we have under IR35 is different laws for different persons - the director of a big concern v. the one man band. That's fundamentally unconstitutional as the law should apply equally to all. Limit the use of dividends v. salary in reducing taxation by all means, but apply that to everyone, not just to the small folks who can't fight back.

              1. Peter Gathercole Silver badge

                Re: One-nation Barmy @JamesPond @Mike 137

                I agree that if the spouse actually does meaningful work a salary should be paid, but it's not uncommon for the spouse to be given a salary salary just below the NI LEL for doing nothing, so it attracts no tax or NI. That is not a huge amount of money, but there is no tax or NI paid on this money at all, reducing the tax take by HMRC.

                I know this happens because when I ran my own company, the accountant I was using complained at me bitterly because I didn't.

      3. LyingMan
        Big Brother

        Re: One-nation Barmy

        And don't forget locum doctors!!! There is a big bunch of them..

        1. Anonymous Coward
          Anonymous Coward

          Re: One-nation Barmy

          >And don't forget locum doctors!!!

          The laugh is I suspect my brother is typical and on being retired under the old NHS contract just became a locum. He's now had 5 years of locum work and this coming year seems to be turning into another layer of icing on the cake.

      4. Mike 137 Silver badge

        Re: One-nation Barmy

        "Those doing specialised consultancy work on short-term contracts often fall outside of IR35 scope"

        Unfortunately the latest test case strongly suggests otherwise for the future.

        The Tax Tribunal decision against Robert Lee sets a precedent that essentially forces every contractor into IR35. Specifically, the arguments offered by HMRC with respect to control (paragraph 126) apply in principle to any contractor or consultant, thereby, if accepted as evidence of "concealed employment" draw everyone under IR35.

        The Tribunal's acceptance that a "qualified" right of substitution nullifies that right is a very serious issue. Not even a "big four" consultancy typically can substitute a consultant without reference to the client, so every right of substitution is to some extent qualified. Indeed the right of substitution increasingly appears as a "straw man clause" devised by HMRC in its own best interest to defeat "outside IR35" claims.

        Furthermore "I find that there is a mutuality of obligation in the limited sense as set out in Cornwall County Council and Quashie of there being mutuality within the contract once entered into for Mr Lee to provide services and for Nationwide to pay Mr Lee, unless the relevant notice is given under the contract." (paragraph 149) is a highly questionable interpretation of "mutuality of obligation" in terms of IR35. As generally understood, the relevant interpretation is of obligation to offer further assignments beyond the assignment contracted for. Interpreting it as the obligation to pay for work done widens the scope to the point where IR35 is inescapable. Even a window cleaner would legitimately expect to be paid for work done, so would on the basis of that interpretation fall under IR35 for each and every job.

        All in all, the Lee judgement is highly unsound and sets a precedent for the emergence of Zero Rights Employment that will drive legitimate contracting out of existence. I hope it is appealed, there being numerous self evident grounds to do so - and I sincerely hope any appeal is upheld for the sake of the entire contracting community.

    2. Doctor Syntax Silver badge

      Re: One-nation Barmy

      Who pays your sick pay when (and it's likely to be when, not if) you need it in the coming weeks?

      Who do you think pays the freelancer's?

      How about this - if the freelancer has to look after themself and you get it as part of your employment why should your entitlement not be treated as a taxable benefit?

      You're looking at two different circumstances and either ignorantly or wilfully seeing them as the same.

      ANd if freelancing is such a good wheeze with no downside risk, why didn't you go that route? Don't tell us it's altruism on your part.

      1. Anonymous Coward
        Anonymous Coward

        Re: One-nation Barmy

        Sick pay is a taxable benefit?

        1. Doctor Syntax Silver badge

          Re: One-nation Barmy

          Two workers are being taxed on the same rules for earnings but one gets benefits the other doesn't then if those benefits can have an assessed value why shouldn't they be taxed? As things stand some, such as a company car, are taxed. But other things such as regular work as opposed to zero hours or SSP aren't. The logic is that either they should be or the difference in status should be recognised. For a long time that difference in status was recognised by the company model - the company was taxed as a company and was responsible for paying the extras to the worker out of company funds.

          As the economy moves towards the gig model then regular employees will start to be seen as privileged tax dodgers benefiting from un-taxed perks that the majority don't get with popular pressure to correct that.

        2. Roland6 Silver badge

          Re: One-nation Barmy

          >Sick pay is a taxable benefit?

          Don't pay NI, don't get SSP!

          Sick pay is treated as income for tax purposes, so is fully subject to income tax.

  9. CharliePsycho

    Horse Bolted

    I've already let everyone go and I'm winding up the company. There were only three of us, but there is no work and all the contracts were terminated last month.

    I suppose the government kind hide the losses in coronavirus statistics and by next year it wont matter as all the HR managers will be zombies by then... oh... hang on :o

    1. tip pc Silver badge

      Re: Horse Bolted

      So you where running a business inside ir35 and are complaining the government closed a tax loophole.

      Why not run your business outside ir35 instead of closing?

      1. One-nation give over

        Re: Horse Bolted

        Exactly

      2. Sir Runcible Spoon

        Re: Horse Bolted

        Where did the OP say he was running a business as inside-ir35?

        It appears they are closing because the work has dried up due to the way clients have reacted to the new regulations. Not something within his control.

    2. Anonymous Coward
      Anonymous Coward

      Re: Horse Bolted

      >There were only three of us, but there is no work and all the contracts were terminated last month.

      There is plenty of work for cleaners who can do a "deep clean"...

      A client couldn't find one who could do the work in a reasonable timeframe - hence we volunteered to work along side some of the staff - result office deep cleaned and we got a contract to do infrastructure upgrade brought forward from next year.

      1. First Light Silver badge

        Re: Horse Bolted

        By "volunteered" I assume you mean offered to work for money?

        Otherwise, I have some work that needs doing for free . . .

        1. Anonymous Coward
          Anonymous Coward

          Re: Horse Bolted

          "volunteered" did mean no pay for this specific activity, however, we have treated it as goodwill/loss leader/customer investment: work half-day for free get a month's worth of work to be delivered in this financial year - just as others are cancelling work...

          >Otherwise, I have some work that needs doing for free . . .

          Have no difficulty in doing specific items of work for free, just that there needs to be an appropriate sized piece of paid for work signed off...

          1. Doctor Syntax Silver badge

            Re: Horse Bolted

            "Have no difficulty in doing specific items of work for free, just that there needs to be an appropriate sized piece of paid for work signed off."

            That, of course, is thinking like a business. It's called making an investment.

      2. MonkeyCee

        Re: Horse Bolted

        "A client couldn't find one who could do the work in a reasonable timeframe"

        Or wasn't prepared to cough up.

        I currently work as a housekeeper for a big (20k staff) cleaning company . Hotels are all closing, so our usual 18 FTE team is currently 2. Which tomorrow includes me.

        There are about thirty five people on the teams, and everyone has as much work as they can handle if they are prepared to clean hospitals, police stations and various other public areas. A number of these contracts have been classified as required for the emergency. So if the cleaning company has to fill these roles first.

        So much like the bog rolls and rice, almost all the normal cleaners are already booked and paid for. Plus if you're doing it yourself, you can use products that are not safe for us to use daily.

        1. Anonymous Coward
          Anonymous Coward

          Re: Horse Bolted

          >Plus if you're doing it yourself, you can use products that are not safe for us to use daily.

          Also, we can use step-change products like disinfectant grade UVC lighting that make repeat deep cleans a doodle...

  10. tip pc Silver badge

    The number of p155 takers ruining it for genuine contractors

    “ ensure people working like employees but through their own limited company, pay broadly the same tax as those employed directly”

    So long as your paying your correct taxes contract all you want, but pay your correct taxes like non contractors do.

    1. alain williams Silver badge

      Re: The number of p155 takers ruining it for genuine contractors

      So long as your paying your correct taxes contract all you want, but pay your correct taxes like non contractors do.

      Is it fair if two people who work together with the same income but one of them: does not get sick or holiday pay; is there for a few months & lives 100 miles away but has to pay train & hotel out of after-tax income; etc ?

      Yes: some contractors were taking the piss, but some do have real extra costs and take real risks.

      1. LucreLout Silver badge

        Re: The number of p155 takers ruining it for genuine contractors

        Is it fair if two people who work together with the same income

        Fair is a meaningless word, but in any case my contractors took home between 2 and 3 times as much as my typical FTEs.

        I'm sad that contracting as it has been is ending, because I wanted to do it next, but lets be honest, for most in London its been a great tax avoidance wheeze while it lasted, with little genuine downside. I realize many contractors don't work in London, however the ones that do are the ones the government notices.

        Any staff carpark below exec level makes it transparent - the good cars almost always belong to a contractor.

        Genuine best wishes to you all out there. I've done the level best I can by my contractors, and my FTEs, but preparing for the bad times is part of the day rate during the good times - many people will be losing their jobs who never had that chance.

        1. Anonymous Coward
          Anonymous Coward

          Re: The number of p155 takers ruining it for genuine contractors

          Contractors often get fancy cars as they can charge them as a company expense. It's that or pay HMRC more Corporation Tax...

          A lot of permanent employees used to get nice company cars as well until companies stopped offering them as a perk as often.

        2. Anonymous Coward
          Anonymous Coward

          Re: The number of p155 takers ruining it for genuine contractors

          "the good cars almost always belong to a contractor."

          Or a sales rep from a supplier - sometimes you need to project success in order to achieve it.

        3. Roland6 Silver badge

          Re: The number of p155 takers ruining it for genuine contractors

          >Any staff carpark below exec level makes it transparent - the good cars almost always belong to a contractor.

          Going all the way back in the 1980's this situation made me wryly smile; being aware of the monthly lease cost of company cars. The only reliable conclusion I decided wasn't so much the saving of the £10~20 p/month - which could be funded by employees (ie. for £200pcm fully funded by the company you can have a Ford Focus, contribute an additional £20 pcm from your salary and you can have a BMW 5 series instead... Yes I know I'm exaggerating to make my point, but it's not totally off the truth of the matter) but the maintaining of differentials and perceiptions; customers form a different perception of a company (and its representatives) if for example the engineers drive BMW's as opposed to Vauxhall Cavaliers.

    2. Roland6 Silver badge

      Re: The number of p155 takers ruining it for genuine contractors

      >So long as your paying your correct taxes contract all you want, but pay your correct taxes like non contractors do.

      But what exactly does this mean?

      A contractor employed by a major SI can easily be on a £100K package (including overheads) ie. cost £500 per day, but sold at £1200 per day. We can assume (as HMRC assumes this) this employee (and employer) are paying the correct tax on these £500 pday.

      Now I can undercut the SI and charge £800 pday for an identical level of service and pay myself (the employee of my company) the £500 pday rate out of this.

      For some reason HMRC with IR35 has deemed that this arrangement doesn't satisfy the "broadly the same tax as those employed directly" criteria...

      1. 6underground

        Re: The number of p155 takers ruining it for genuine contractors

        Good luck trying to undercut the SI, you don't have the balance sheet, liablity cover, governance, etc. that the SI holds. The SI provides the customer certainty in that should you need replacing for what ever reason this is the SIs problem and not the customers. This is something you cannot do and incedently one of the criteria used to decide your status.

        So while you can undercut the day rate, the customer does not only pay for you and niether will they deal directly with you.

        1. Alan_Peery

          Re: The number of p155 takers ruining it for genuine contractors

          And thus do they continue to overpay by 50%...

        2. Anonymous Coward
          Anonymous Coward

          Re: The number of p155 takers ruining it for genuine contractors

          >Good luck trying to undercut the SI...

          Welcome to the marketplace... I don't actually try and compete directly with SI's et al.

          I have worked for several over the years and became well versed in the mostly perceived added-value embedded in their fee's which varied greatly from client-to-client and assignment-to-assignment, so have a good understanding of what value-add my business can deliver to a client engagement.

          >This is something you cannot do and incidentally one of the criteria used to decide your status.

          Don't really see that in HMRC's published IR35 in/out criteria, beyond the much-discussed substitution clause. Perhaps HMRC needs to publish their full selection criteria, used to select targets for IR35 compliance assessment/harassment...

          >So while you can undercut the day rate, the customer does not only pay for you and neither will they deal directly with you.

          Firstly, yes the customer is contracting with my company to provide a service, albeit one that I - wearing my employee's hat as opposed to my sales hat - will (in the main) be delivering and so the fee does include a perceived value element for a set of mostly intangibles and insurances, which yes won't be as extensive as those a major SI can offer, but still add value over-and-above a simple employee engagement ie. the £500 pday component.

          Secondly, I've had few problems getting clients to deal directly with my company, although how things are set up for payment may not always reflect this.

  11. The Vociferous Time Waster

    Too late for many

    The deplorable conduct by many companies will leave them struggling to recruit now no matter what the terms. I will be checking offpayroll.org.uk before any contract from now on.

    1. Anonymous Coward
      Anonymous Coward

      Re: Too late for many

      Thanks. That's a very good link.

      1. Doctor Syntax Silver badge

        Re: Too late for many

        Except in one regard. It's totally and utterly dependent on having javascript enabled. Did nobody tell them it's possible to build web sites without it?

    2. LucreLout Silver badge

      Re: Too late for many

      I will be checking offpayroll.org.uk before any contract from now on.

      My whole industry is on there. None of the feedback is good.

  12. Aristotles slow and dimwitted horse Silver badge

    Darn it...

    Bloody HMRC. I'd literally just agreed my outside status with my current client and was finalising my new contract as well.

    Really feel for all of those that due to no fault of their own have decided to walk or start to shut their companies down. Really hope you all find something soon.

  13. Anonymous Coward
    Anonymous Coward

    Way too late, in my department everyone has already left or switched to umbrella. What a shit-show.

    1. 2+2=5 Silver badge
      Facepalm

      > Way too late, in my department everyone has already left or switched to umbrella. What a shit-show.

      Yeah, bloody corona virus! Why didn't it strike earlier?

  14. JDX Gold badge

    Errata:

    What is IR35?

    IR35 is a tax reform that was unveiled in 1999 by the UK tax authorities. The latest regulation change will force medium and large businesses in the UK to set the tax status of their contractors and freelancers. Previously this was set by the contractors themselves.

    Contractors found to be within the scope of the legislation – ie, inside IR35 – will have to pay the same tax and national insurance contributions as full-time employees, despite not receiving benefits such as holiday or sick pay, pension, or parental leave.

    El Reg, this is factually incorrect. They will NOT pay the same tax as employees but without the same rights. They will pay more. Under IR35, you pay the company NI and the employee NI. i.e. you pay what employees do on their income, but you also pay the NI contributions companies make when paying employees.

    This is quite an ommission.

    1. One-nation give over

      Re: Errata:

      This is incorrect, all companies pay this so it effectively comes out of perm employees pay from your point of view.

      1. Doctor Syntax Silver badge

        Re: Errata:

        It doesn't come out of employees' pay from the PoV of those habitual wingers who, for some strange reason, never actually considered this supposed racket as something they were prepared to risk their own livelihoods on.

    2. diodesign (Written by Reg staff) Silver badge

      Re: Errata:

      Thanks for the feedback - I've tweaked that sentence.

      Don't forget to email corrections@theregister.co.uk if you spot anything wrong. We can't read every comment, but we can read every email to that address. Case in point: if you had emailed us, we could have addressed this hours ago.

      C.

  15. Anonymous Coward
    Anonymous Coward

    SHEEP

    We are just sheep to the Government as long as we keep voting for the same idiot parties.

    1. Doctor Syntax Silver badge

      Re: SHEEP

      Yes, we need more and better idiot parties to vote for.

  16. d3vy

    Bring forth my confetti cannon filled with £50 notes.

  17. NogginTheNog
    FAIL

    The party of "business"

    So isn't this in essence an admission that the IR35 changes *will* have an adverse impact on business (and contractors of course)?

    1. Jason Brooks

      Re: The party of "business"

      Yes, but you'll never hear this ever uttered from a politician. They already got loads of people scared and forced into perm and umbrella, closing their companies, so they got a significant 'win' already.

    2. Doctor Syntax Silver badge

      Re: The party of "business"

      No longer. You know what BoJo said about business.

  18. Jason Brooks
    Mushroom

    Hunch

    I had a hunch they might pull the legislation changes at the last minute, because they have already largely accomplished their objective... tons of people and companies were scared/forced into perm and umbrella and a lot of these contractors have already closed their companies. This is already a win for HMRC as not everybody will bother going contracting again.

    The question is... was this always the plan or is it really about the virus all of a sudden? (or a bit of both)

    The damage is done. Companies and people's lives are ruined already. You'll see companies like accountancies and insurance companies reducing staff and/or putting rates up for their remaining customers to cover the massive client losses. How many contractors cancelled their 2nd sim cards, insurance, accountants, business bank accounts, hosting, software subscriptions, out of town hotel bookings, train and flight bookings, etc. This was a shoddy piece of legislation to begin with and I don't think the government really did a comprehensive impact study to examine and understand the wider long term repercussions of this.

    Now, they're damned if they do, damned if they don't, as it has caused so much carnage already. I was actually surprised they postponed it, because they have a history of trying to save face and bulldoze ahead regardless of countless studies and opinions of industry leaders to the contrary.

    The abysmal state of the contracting market is unlikely to significantly improve and as other commenters have also stated... it's just postponing the inevitable - it's going to raise the same issues in a year's time if not scrapped all together. I used to get between 3 and 8 calls from recruiters in a day. During the entire February I had a wopping two calls. Cue the tumble weeds....

    Already, I'm getting rumblings from fellow contractors who are saying the companies they're servicing have said this morning that they will not change their stance on IR35. Lots of contractors haven't even been given fair assessments (dubious legality on this point as well) and were still blanket banned. It's sad so say, but the future still looks really bleak.

    1. Anonymous Coward
      Anonymous Coward

      Re: Hunch

      Everyone's talking about shutting down businesses and entrepreneur's relief etc... There will be more than a few (not just contractors in the post Covid world) who are shutting their PSC down with debts to HMRC:

      Oh sorry, terribly sorry, was getting caught up and all, but now there's no income stream I cant continue.

      Here's the ££££ to square up the director's loan account, but other than that, there's a company laptop a mobile and squat else... bye!

      AC

      1. Anonymous Coward
        Anonymous Coward

        Re: Hunch

        My accountant has previously advised never to fold and walk away from a directors loan. Now advised that Ir35 opens a whole number of options.

        He's a very risk adverse chap, large company and doesn't take short cuts.

  19. nbedford

    As someone who has just cancelled his plans to leave a permanent position to go contracting, this delay of IR35 will not change my mind. Much of the damage has already been done. Contractors have left or about to leave. Many companies have put a blanket ban on hiring Limited Company Contractors and are unlikely to do a U-turn just for the sake of the next 12 months. The only thing that would begin to repair the damage is a Government pledge to abandon this odious legislation altogether.

  20. Nematode

    Wot about the Public Sector?

    It's not the private sector that is most in need at this time, it's the public sector! But that horse has bolted. Great, eh?

  21. The Onymous Coward

    It's a bit late now. If anything, deferring just before the deadline will actually give companies more work to do - everyone has either left or prepared to switch to an umbrella. Now it all has to be rolled back.

  22. Anonymous Coward
    Anonymous Coward

    Sorry folks, but the IR35 postponement has nothing to do with IT contractors.

    As someone mentioned above, its all about locum doctors & nurses used by the NHS to provide short-term cover across the country.

  23. ter63

    Completely Useless Move

    Far too late to have any effect at all. My wife had already been kicked out months ago due to blanket bans and the contractor market left decimated in general.

  24. This post has been deleted by a moderator

    1. Roland6 Silver badge

      Re: NHS staff shortages and headlines

      >The "solution" of onshore outsourcing is now not looking as attractive.

      Only the DIY approach to onshore outsourcing where the 'risk' is taken on and managed by the client organisation. Onshore outsourcing of complete business functions/departments is still a goer, however, the players in this market are the big boys and not the Ltd. wrapped sole contractor.

  25. Rich 2 Silver badge
    Stop

    Hypocracy!

    Sooooooo... if the contractors are all evading tax and being generally quite naughty then that's BAD, isn't it?

    So, yes, of course, you want to (indeed are compelled for the good of the nation) to clamp down on their behaviour. Can't let these thieves and vagabonds carry on like this!

    Buuuuuut.... if you are prepared to delay such obviously important action against these terrible contractors, then ....errrr ....doesn't that show that HMRC are either;-

    1/ Happy to allow this terrible crime to go unpunished. Surely, that can't be right can it? I can't think of any other examples where the govt have a plan to stop crime but then decided it doesn't actually matter any more. That would be very odd

    ...or...

    2/ HMRC don't actually believe that what the contractors are doing is actually THAT serious? In fact, it's perfectly legal within the normal bounds of business law, and HMRC is and has been talking complete bollox all this time and are actually just on a witch hunt

    So, which is it HMRC?

  26. Disgruntled non-employee

    Delaying IR35 doesnt change a thing !!

    Whilst under the pretext of being considerate in trying times the reality is it doesn't make a difference !

    Why?

    - Whilst supposedly being based on an individual determination, the End Client deemed ALL contractors within the organisation to be ‘inside IR35’, despite clear roles & contracts to the contrary

    - Now that the change in legislation is deferred to 2021, liability moves back to the Agencies

    - As the end Client has already stated contractors are ‘inside’ IR35, the agency will not risk liability so are following suit and also stating the role is ‘inside’ IR35 going forwards. This is despite having always stated to the contrary and engagements being redefined under new terms last October 2019 to reflect this

    - They are now offering to continue the existing ‘outside’ IR35 contracts & payment terms (i.e. to the PSC) but have highlighted it is the PSCs responsibility to assure payment of employer NI & PAYE or change to have payments via an umbrella company!

    So the delaying of IR35 doesnt change a thing.

    Dont get me wrong, I am extremely grateful for the opportunity of continued work during these difficult times - but let's not be fooled that Mr. Barlcay's announcement earlier in the week is going to result in our lives being any the better because for it.

  27. This post has been deleted by its author

    1. This post has been deleted by its author

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