Public sector changes to be rolled out further

It was no surprise to many that the chancellor quoted the "Success" of the IR35 reforms in the public sector as the basis to roll these changes out to the private sector.

Recap: Introduction of IR35 reforms to the public sector.

To some, the surprise came from the implementation date of April 2020; they claimed to have listened to feedback in the consultation and give businesses more time to adapt. 

Additionally, the rules will only apply to medium and large businesses, this being the agency/end client. Although a small win, this is welcome news. One of my many concerns with these reforms was how the small companies who use contractors would be able to apply these new rules. Admittedly this is a small portion of the overall contractor market.

I am yet to see any official definition of a small company for this purpose, so let's wait and see on this front.

Despite not yet publishing the results of the consultation, the Government have confirmed a further consultation will take place to shape the draft Finance Bill Legislation - this would suggest that the rules being rolled out to the private sector will not just simply be the same as currently stand for the public sector - providing a glimmer of hope for more common sense to prevail yet....

"HMRC will continue to work with stakeholders to improve further CEST and guidance before the reform comes into effect."  - This suggests that they may have at least partially listened and will be changing the CEST tool, however, I hold little hope for any useful improvements to the tool.

One point addressed in the fact sheet was "confirmation" that HMRC will not target contractors historically where their current role suddenly is declared Inside IR35 as a result of these changes - personally, I think this is a load of rubbish, they will have all the data they need and see this as an easy win. For any contractors in existing roles suddenly declared Inside IR35, I would fight this very hard, seek professional advice rather than just accepting the CEST tool & worst case scenario, look for a new role!

I expect we will see the market flooded with "solutions" to these changes, as we have seen in the public sector. None of these "solutions" will work for very long, please please please stay away from them! HMRC will eventually aggressively target these and it just is not worth the risk, everyone in this industry has seen the devastating effects on contractors who have used certain schemes in the past.

The fact that the reforms are announced for 2020 rather than 2019 is the result of a lot of campaigning, from a lot of people. I think this small victory should be celebrated for a short time but let's not forget we face another consultation so the fight isn't over. I think it is now very unlikely that these changes will be kicked into the long grass but we can certainly try our best to influence them as much as possible.

Whatever happens, I have seen the industry go through worse and come out stronger, the simple fact is that the temporary workforce is key to our economy!

Timeline of events

  • Presumably, we will see published response to the initial consultation shortly.
  • A further consultation will be launched in the next few months.
  • Draft Finance Bill Legislation published in Summer 2019
  • Changes come in to effect April 2020

The government have published this fact sheet on the reforms:


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