Contractors IR35 Abolition Petition
A contractors IR35 abolition petition has been set up. Freelancers across the UK are being asked to sign it. The petition needs to get 10,000 signatures to get the Government’s attention. At this level they will have to respond to it. If they get 100,000 signatures the Government will have to consider it for a debate in Parliament.
Questions on Contractors IR35 Abolition Petition
What is IR35?
What promises did the Conservatives make on IR35?
Why Do Contractors want IR35 Repealed?
What are the main IR35 changes to be Implemented?
What’s the reason for contractors IR35 abolition petition?
Will the Government listen to contractors?
How is the contractors IR35 abolition petition doing?
What is IR35
IR35 was set up in 1999 after a campaign in The Times newspaper. It was to prevent the practice of staff members quitting their permanent jobs on a Friday and starting as contractors on the Monday. This was financial beneficial, tax wise, for both the new contractors and the company. They would do the same job at the same desk in the same office. The Government called them disguised employees. They saw it as a tax dodge and they were right.
However, the IR35 legislation caught more than those contractors in its net. Many who had long contracting careers now found themselves inside IR35.
A Government Minister, Dawn Primarolo, even admitted to the then Professional Contractors Group that IR35 caught more contractors than intended. However they did not repeal it or amend it.
What Promises did the Conservatives Make on IR35
When the Conservatives came to power they told the PCG (now IPSE) that they would repeal IR35. Indeed the PCG rushed out a pres release before the election saying this. However, the manifesto promise only said that they would ‘look at’ IR35 again.
They did look at it after the election and they decided not only that they would keep it but that they would strengthen it. And they have been doing so ever since.
Theresa May and Philip Hammond said last year that it was ‘ an anomaly that a self employed person earning 100,000 a year pays less tax than an employee earning 100,000 a year. This idea was almost certainly as a result of listening to the big consultancies who have always seen UK contractors as rivals. Those representing contractors are far less successful at lobbying. They do not have the Prime Minister’s or Chancellor’s ear.
Why Do Contractors Want IR35 Repealed
Contractors want IR35 repealed as they consider themselves to be in business on their own account. They would expect to be treated so. The Government sees contractors as off-payroll workers. They want to tax them as employees. However, they do not want to give them any of the benefits of employees. They do no want them to get holidays, sick pay, maternity leave, pension contributions etc. They see them as disguised employees – but only for tax purposes.
The Government rolled the IR35 changes out in the public sector in 2017. Now they want to roll it out in the private sector in April 2020. However, many of the top banks and finance companies are deciding to stop using contractors from this autumn.
What are the Main IR35 Changes to be Implemented?
The main change is in the area of who decides a contractor’s IR35 status. Previously it was the contractor himself or herself. If contractors declared themselves outside IR35 and HMRC did not agree, the contractor could be hit by a request for back tax with interest and penalties. HMRC wanted to make an example of some contractors. However, HMRC lost most of the cases that went to tribunal.
So, the Government changed it so that the hiring company is responsible for determining a contractors’ IR35 status. If they got it wrong the hiring company could be responsible for paying the back taxes, interest and penalties.
So, some organisations in the public sector were intimidated into deciding to take no more limited company contractors. Now we are hearing banks and finance companies such as HSBC, Lloyds, Morgan Stanly and M&S Investments deciding to take no more limited company contractors.
What is the Reason for Contractors IR35 Abolition Petition
The reasons for contractors abolition petition is that UK contractors are completely fed up with being targeted by the Government for more tax. They are an easy target as contractors groups are a lot less effective at lobbying Government than the big consultancies. Now they want to take matters into their hands and force the Government to act via this petition.
Will the Government Listen to Contractors?
There is not a great deal of history of various Governments listening to contractors over IR35 – or anything else. Contractors lobbying groups do not appear to have the ear of various Prime Ministers and Chancellors. Also, contractors tried to get IR35 repealed at a time of austerity when the Government were looking desperately for money to bring down the deficit. They always see contractors as an easy target – a soft touch.
However, in saying this, the Governemnt did intend to put this legislation in place for April 2019. The ‘leak’ to the Sunday Times, almost certainly floated there by the Treasury, said so. However, a previous contractor petition, which reached over 10,000 signatures almost certainly caused the Government to delay it for a year for consultations.
They are not likely to delay it for another year – but you never know. There will be a new Prime Minister and Chancellor in situ by the time this legislation is implemented next April. And contractors have to do something.
How is the Contractors IR35 Abolition Petition doing
The IR35 abolition petition is doing very well. When I went to bed last night there were 5,560 signatures. By 8:20am there were 7,570 signatures. So, it is really flying. You can see it ticking over nicely.
However, it is not there yet – and it needs your vote.
How Can I Find the Contractors IR35 Abolition Petition
You can find it here – Contractors IR35 Petition
Sign it yourself. Then send this explanatory article out to others you know. Share it on social media. Once it gets past 10,000 it will be brought to the attention f Government. And you just never know. Maybe this time it will hit 100,000 and will lead to a Parliamentary debate.
If you know anyone else who would find this article useful, please share it with them using the social media buttons at the top and bottom of the page.
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