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Thousands back campaign to stop IR35 contractor pay changes

IR35

More than 16,000 people have backed a campaign to stop changes to contractor pay rules which will widely impact the North Sea energy sector.

IR35 changes come into force in the private sector next April, which will stop contractors who are effectively employees of a company “disguising” themselves to pay less tax.

A petition branding the move as “anti-business” and demanding its repeal is now eligible for a government response as it has surpassed 10,000 signatures.

It comes ahead of the government publishing the Draft Finance Bill 2020 next week, which is expected to outline the proposals in greater detail.

The Treasury has estimated IR35 off-payroll rules will bring in an additional £2.9bn in taxes by 2024, following similar measures being brought into the public sector in 2017.

Brian Rudkin, head of Employer Services at accountancy firm Johnston Carmichael, said the petition comes at a “late stage”, but the legislation will affect thousands of North Sea contractors.

He added that he expects a “rush” from companies working to implement the changes ahead of the April deadline.

He said: “I’m actively working with a number of organisations in the north-east at the moment and it’s evident from those discussions that this is going to affect the whole sector and the entire region’s economy.

“We’re waiting on draft legislation to come out next week and until then we are a little in the dark on the full impact it will have on the sector.

“I think in general terms the industry has probably been quite slow as a whole to make changes for this new legislation coming in but I have seen in recent months there has been more traction from the sector in the north-east.”

From April 2020, the obligation will pass to large and medium-sized firms to assess whether the contractors are genuinely self-employed, rather than actually working for the company itself which is engaging the services.

A report earlier this year from the Aberdeen and Grampian Chamber of Commerce revealed one in 10 firms will look to make changes as a result.

Fiona Herrell, partner in the employment team at law firm Brodies, said there is still a lot of work for some companies to do.

She said: “While we await the final legislation, in the oil and gas sector we are seeing companies use the time between now and April 2020 to understand the impact the new legislation may have on their business models and how they can manage the new compliance requirements and risks.

“As the sector traditionally has a large contractor community, it is important to act now as although there is time, there is a lot for some organisations to do.”

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