It has been announced by the Treasury that the 2018 budget will take place on Monday 29th October. The budget is taking place earlier than expected and many commentators consider this as an indication that the much expected private sector IR35 reforms will be announced by the chancellor, Phillip Hammond.
Speaking to Contractor UK, IR35 Specialist Kate Cottrell believes the 2018 budget has been brought forward in order to give the private sector and private sector contractors as long as possible to adjust to the changes. “I was hoping that the Budget would be delayed, so that whatever the government decides regarding rolling out the new rules to the private sector, would leave too short a timetable to implement them from April 2019,” she said.
As the government are doing the opposite (holding the budget early) they would be able to claim they have given the private sector a longer time to prepare for IR35 changes should they be introduced in April 2019, as many expect. When IR35 reforms were introduced to the public sector in April 2017, the government received much criticism for announcing the changes in late November 2016, which didn’t give those effected much time to adjust to the new legislation causing considerable panic and confusion to public sector organisations and contractors working in the public sector.
Many are questioning if the proposed reforms are a wise move by HMRC given the criticism and proven limitations of their CEST tool which is designed to be used by contractors to determine their employment status for tax purposes (i.e. if they fall inside or outside IR35). Additionally, HMRC were directly implicated in the high profile case of Sarah Winchester, who successfully claimed for unpaid holiday as a result of the treatment she received whilst she was working on a contract assignment at HMRC.
These cases suggest that HMRC are confused by their own rules and regulations and are unable to interpret or apply the legislation they expect businesses and contractors to compliantly adhere to. And of course the timing couldn’t be worse due to the unprecedented changes the UK will experience next year when we officially leave the EU on 29th March 2019.