Delay implementation of IR35 legislation reform until COVID-19 is resolved

Freelancers play a vital role in the UK economy and are the changing face of work. This petition requests the Government to delay the implementation of the upcoming IR35 legislation until COVID-19 is eradicated and the economy recovers to a level where such a change can be better addressed by all.

In an economy still wrestling with the pandemic, the planned implementation of IR35 in 2021 is causing a great deal of uncertainty and stress throughout the UK labour market. This threatens to put further strain on the wider economy looking to get back on its feet.

As COVID is showing no real signs of abating, this petition asks to pause IR35 to a time when the economy can address the issues surrounding this legislation in a more singular fashion and from a position of strength.

The Government has already delayed this reform until April 2021 in response to the COVID-19 crisis. However, there will not be a further delay. The legislation has now received Royal Assent, and the reform will be implemented in April 2021 as announced.

It is important to note that this change is about compliance with existing tax law, and is not a new tax. The existing off-payroll working rules, that have been in place since 2000, are designed to ensure that where two people are working in the same way, but one is directly employed and one is working through a company, broadly the same amount of tax is paid. The reform in the private and voluntary sectors will improve compliance with these rules by moving responsibility for determining whether the rules apply from the individual’s company to the client engaging them.

The reform was originally announced at Budget 2018. Many businesses were prepared for the reform to be implemented in April 2020 as originally planned, and HMRC have undertaken a significant programme of education and support to ensure that large and medium-sized organisations are ready. Since the delay businesses have been putting in place preparations for April 2021, and another postponement would lead to uncertainty for businesses and potentially additional costs.

Further delaying implementation of these changes would also have other very significant drawbacks. As well as the fiscal cost, delay would prolong the fundamental unfairness of taxing two people differently for the same work. Contractors are an important part of the UK economy and the Government values their contribution. However, that should not mean that contractors should pay less tax than employees, when their engagement meets the tests of an employment relationship. Further delay would also extend the disparity between the private and voluntary sectors, and the public sector, where the reform has been in place since 2017.