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Posted 2nd April 2020

IR35 delayed amidst COVID-19 pandemic

Businesses have had to adapt to significantly different working practices over the past few weeks, as many work on a solely remote basis amidst the COVID-19 pandemic and the restrictions put in place for the safety of the UK public.

Amongst a whole host of announcements made with regards to the business world and how the Government will support companies through the pandemic, it was also announced that IR35 reforms for the private sector will be delayed until 2021, in an effort to reduce the already mounting pressure on businesses.

IR35 delayed

Whilst many in the contracting have breathed a sigh of relief that they have another 12 months to prepare for the forthcoming changes, the announcement comes a little too late for some, as businesses and contractors had already implemented the necessary changes to comply with the legislation. This has meant that many contractors have had their contracts terminated, with medium to large businesses investing significant time and money in adapting their existing processes to the changes.

Speaking of the reforms, FCSA Chief Executive, Julia Kermode, has said:

“We are aware through our evidence submitted to various government bodies, including the House of Lords, that some businesses have spent in excess of £700k in preparing for the private sector reforms which illustrates only the tip of the iceberg of the cost to businesses and the economy.

I very much hope that some detailed analysis of the wider implications of this reform can be undertaken in the coming months in order to establish whether or not it should be scrapped entirely, rather than simply ploughing on in 12 months’ time.”

Will IR35 reforms still go ahead?

Whilst Chief Treasury Secretary, Steve Barclay has stated that the delay is simply ‘a deferral, not a cancellation, and the Government remains committed to reintroducing this policy’, many hope that this will provide adequate time for the Government to reassess the necessity of the reforms and ultimately stop them coming into force.

Currently however, businesses must still work towards the fact that reforms are on their way in 12 months. Businesses and contractors that had yet to adequately prepare for IR35 reforms, this additional time must not be wasted.

If you are one of the businesses or contractors still unprepared for the reforms and how they will impact your existing processes, use this time wisely. Contact the team at Exchequer Solutions for more information on your options and how you can prepare.

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