Deferred IR35 rules, gives companies valuable time to adjust.

In the chaos of Coronavirus, the government took action late yesterday to suspend the enforcement of IR35 legislation from April by 12 months – a massive sigh of relief, and some much-needed respite for the thousands of freelance and interim contractors over the next 12 months. This decision will be welcomed by the recruitment industry, clients and contractors, allowing them to do their best to survive during the foreseeable future.

"This is a deferral in response to the ongoing spread of COVID-19 to help businesses and individuals," announced Chief Secretary to the Treasury, Steve Barclay MP to the House of Commons.

Companies who took action to review their hiring needs and switched to a bias towards perm may have been given the flexibility too, allowing them to get through the next 12 months engaging a flexible workforce without compromising on the level of skill and impact to projects in their business.

The contract workforce petitioned tirelessly for the government to reconsider its approach to IR35, suggesting the significant impact on the contractor economy in Britain. The government finally came to its senses yesterday by delaying the tax changes until April 2021.

Chief executive of IR35 specialist Qdos Contractor, Seb Maley, said the government had "seen sense and made the right call" in these "unique" circumstances. He added: "Given the economic challenges that lie ahead of the UK, now certainly would not have been the right time to roll out needless tax changes that endanger hundreds of thousands of contractors' livelihoods."

Is this too late?

Given that organisations are now trying to keep abreast of the COVID-19 outbreak and had already started aligning themselves to IR35, will they remain cautious and take an approach, to batten down the hatches? Or will organisations see this as a glimmer of hope and an opportunity to be agile to meet the demands of their business?

Will organisations continue to assess the requirements for 'disguised workers' an in-scope determination, or will they relax on this over the coming months and revert to engaging with PSCs as they previously did?

Time will tell over the coming weeks and months, as the nation tries to digest and adapt to the current situation that is happening around the world.

Time wasted?

All the efforts of organisations to get IR35 ready along with recruitment agencies on how to apply themselves were not all wasted. We need to take this as a trial run, an educational exercise, and remember that businesses now know to be ready next year when this is enforced. The hard work and preparation of all businesses should not go to waste and allow us to be even better prepared for in the latter part of this year when most companies begin to adjust to demand.

At Talent, we have worked tirelessly over the past four months to prepare for the IR35 challenges ahead, working with many customers advising them with our HealthCheck service and also with contractors to resolve and provide solutions to allow them to find or remain in assignments.

Keep the wheels turning

Amidst all the chaos, uncertainty and confusion we face today, I remain hopeful that the rapid rise of the COVID-19’s impact on everyday life, once under control, markets will swing back at the same pace to respond to the needs of the world. 

The financial update last night, presented by the Chancellor, goes towards taking some of the pressure off. However, it does not go far enough yet to give assurance for everyone's ability to survive the day to day. I hope there is more to come from the government to make this happen.

Regarding IR35, it's a welcoming light, and further hope for companies to take time to review the approach and their plans to re-engage PSCs and utilise contractors to help them over the coming months. Let's all hope that things recover quickly – both people’s health, and the economy.