Recent comments by Conservative leadership favourite Liz Truss that she would review IR35 legislation if she were to become the next Prime Minister have largely been cautiously welcomed by figures from the UK’s contracting industry.
However, many have called for the UK’s next leader to go further when they come to power, with several pointing out that previous reviews of IR35 rules have not delivered results and warning that the legislation is causing significant harm to the UK’s self-employed workforce.
Since the introduction of the rules for private sector businesses in April 2021, many firms have adopted blanket policies of either classifying all contractors as “inside IR35” or stopping using contractors altogether. The rules have been blamed for a sharp decline in the size of the UK’s self-employed workforce.
Andy Chamberlain, Director of Policy at the Association of Independent Professionals and the Self-Employed (IPSE), said that IR35 was “destroying businesses and holding back the economy”.
Chamberlain continued: “While it is positive to hear Ms Truss acknowledge the need to look again at IR35, we have had reviews before and none of them have led to anything meaningful. This review must lead to radical and tangible change. Nothing should be off the table, including scrapping this dreadful legislation altogether.”
IR35 Shield CEO Dave Chaplin, meanwhile, said that another review of the legislation was not needed, but added that it was “good to hear” that Truss was concerned with the wellbeing of self-employed workers.
However, he commented: “We don’t need another review, we need action. The so-called reforms are a flawed botch and have simply served to strangle contractors and those businesses which hire them,” he said. “IR35 is an iron shackle, impeding flexible workers who can help deliver growth just when the UK economy and UK plc need them. The time to act is now.”
Kate Cottrell, Managing Director at Bauer & Cottrell, went further still, saying that the impact of IR35 on businesses had been so severe that the idea of another time-consuming review of the rules would “fill many stakeholders with dread.”
Cottrell added: “They need to address the whole status issue including how unfair it is that the self-employed have few rights or benefits but are expected to pay the same tax as employees.”
