Tax  

MP invites views on IR35 as protest planned

MP invites views on IR35 as protest planned

An MP is set to meet groups opposed to the changes to the off-payroll working rules at a drop-in session in parliament this week, following their protest march through Westminster.

Tim Farron MP, member for Westmorland and Lonsdale, will host members of the public and a number of other MPs to discuss the issues surrounding the controversial shake up to the rules — more commonly known as IR35 — this Wednesday, February 12.

The groups plan to protest outside the Houses of Parliament from 11am on the day, before presenting a letter to HM Treasury and then meeting Mr Farron and the MPs.

The Stop the Off-Payroll Tax campaign has organised the protest and lobby day for contractors, freelancers and businesses to explain to their MPs the “damage this ill-considered measure will do”.

Dave Chaplin, director of the campaign, said: “The government is pushing ahead with the off-payroll tax roll out despite the damage this is already causing and despite a general election campaign commitment by the chancellor, Sajid Javid, to conduct a proper review of the flawed IR35 legislation.

“It’s time for this government to work with, instead of attacking, UK contracting and we hope MPs will help persuade them to stop the roll out and work with the sector going forward.”

IR35, which was introduced in 2000, is an anti tax avoidance rule that applies to all contractors and freelancers who do not fall under HM Revenue & Customs’ definition of being self-employed.

From April 2020, every medium and large private sector business in the UK will become responsible for setting the tax status – or IR35 – of any contract worker they use, as is already the case in the public sector.

Businesses and contractors have fiercely opposed the changes to the rules, and tax experts have predicted IR35 could reduce a worker’s net income by up to 25 per cent, costing the typical limited company contractor thousands of pounds in additional income tax and NICs.

But HM Treasury said the taxpayer could be missing out on up to £1.2bn a year by 2023 as a result of people getting the rules wrong, and incorrectly paying tax as if they were self-employed.

The controversy surrounding the changes had prompted chancellor of the Exchequer Sajid Javid to pledge a review of IR35 as part of the Conservative party’s manifesto in the lead up to the general election.

At the time Mr Javid said he wanted to make sure the proposed changes were “right to take forward” but when the Treasury announced the review last month, its scope only covered the implementation of the changes rather than whether they should go ahead, prompting the industry to brand it “hasty” and “meaningless”.

HMRC last week shifted the start date for the changes to the rules in a bid to give businesses more time to prepare. 

Julia Kermode, chief executive of the Freelancer and Contractor Services Association, said the proposed legislation changes were “fundamentally flawed” and were already having a “detrimental impact” on businesses and contractors.