The UK Government is pressing ahead with delayed changes to off-payroll working rules, known as IR35, despite peers having urged it to “completely rethink” its plans.
A Lords’ report earlier this year called IR35 rules – which already affect “off-payroll” (self-employed) workers in the public sector and are being rolled out aross private firms next year – “inherently flawed and unfair”, and called for a “wholesale” review.
Some workers will be left without any of the rights of an employee or the tax benefits of being self-employed, the report warned.
In its newly published response, the government said it was “still committed” to extending the controversial tax reform to the private sector on April 6, but accepted the delay should be used “productively and effectively”.
The Treasury and HM Revenue and Customs (HMRC) document added: “HMRC will continue to engage with a wide range of stakeholders on the implementation of the reform, working with different sectors to ensure businesses understand the changes.”
IR35 aims to stop employees registering themselves as freelance contractors in order to pay less tax.
The tax reform, which was delayed until until next year in light of the Covid-19 outbreak, is deeply unpopular among offshore contractors.
Earlier this year, Michael Reid, insolvency partner at Aberdeen accountancy firm Meston Reid & Co, warned it could be the “death knell” for many one-man band outfits workin in the UK North Sea.