Orange & Gold Blog

Important Budget News

IR35

Well now we know. The Tories are not planning to abolish IR35. The Chancellor has stated that to abolish IR35 would "put substantial revenue at risk". Presumably he is worried about thousands of umbrella workers incorporating overnight. In fact, the Chancellor appears to have rejected all proposals put forward by the OTS earlier this month on ways forward to improve or remove IR35. This is what the Treasury have published in yesterday's Budget papers:

Following the publication of the OTS review of small business tax, the Government commits to making clear improvements in the way IR35 is administered. These
improvements will include setting up a dedicated helpline staffed by specialists, publishing guidance on those types of cases HMRC view as outside the scope of IR35, targeting compliance activity by restricting reviews to high risk cases and setting up an IR35 Forum which will monitor HMRC's new approach. The Government has decided to retain IR35, as abolition would put substantial revenue at risk.

Perhaps we are overly sceptical, but in our view this looks as if nothing significant will change. You still have to consider IR35 on each contract assignment. The dedicated helpline will carry the same concern as the original one in that HMRC will favour their own interpretation and not be independent. They already provide 'guidance' but it is again a partial view. And what is a 'high risk case'? The IR35 Forum is, presumably, a watchdog of some sort. It all adds up to very little.