While undoubtedly this will be welcomed both by contractors and consultants who operate in this way and by those businesses which make significant use of their services:
- Many businesses will have already got to grips with the 2021 IR35 reforms, or with the consequences of their temporary non-compliance with them; and
- Some may be doing so currently and will need to carry on with this, given that the repeal will not take effect until 6 April 2023
These businesses may be somewhat vexed about the time and cost they have already invested in compliance with such short-lived reforms, and the need to now revisit the impacts of this latest change on their future plans for using contractors’ services versus employees’ services.
Cases on employment status, which includes the IR35 rules, have also been part of a stream of recent tax and employment law court cases, as the judiciary has been invited to grapple with the concepts of what constitutes employment as opposed to the provision of services. These changes do not tackle the complexities that have arisen out of these issues and that position is not changed by these reforms. These reforms represent a change to who, practically speaking has to make the decisions on employment status for IR35 purposes on a day-to-day basis, rather than simplifying that process. We hope the Government will take the opportunity to take that extra step in the near future.