The House of Lords has listed its concerns regarding IR35 reforms in a letter to the Treasury

22 April 2020

Lord Forsyth of Drumlean sent a letter to the financial secretary to the Treasury, Jesse Norman, which detailed all of the concerns raised by the House of Lords in relation to the implementation of IR35 reforms. They have been delayed to take effect from 6 April 2021 but were originally due to be introduced in tax year 2020-2021.

Lord Forsyth chairs the Finance Bill Sub-Committee, which was announced on 4 February 2020, and places specific focus on the rollout of off-payroll working rules. The group hopes that the government will address the issues it has highlighted before the changes are introduced next year.

The letter discusses the costs associated with the IR35 reforms and the fact that contractors may lose business or face declining rates as a result of them. Businesses have voiced their concerns at the administrative burden that off-payroll working rules bring with them, and the letter also details concerns the Sub-Committee has heard about contractors leaving freelancing, losing business and suffering due to a decline in pay rates, as clients pass down additional costs they will incur due to the reforms.

The Sub-Committee also urges the Treasury to respond to questions raised within the letter in relation to the extent of the success of the changes within the public sector, blanket assessments, the impact on umbrella companies, HMRC’s Check Employment Status for Tax (CEST) tool, and how fair the reform will be.

The Sub-Committee requested a response to questions raised in the letter within ten working days.


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