Raymond Doherty 11 Nov 2019 11:32am

IR35 needs to be delayed, says FSB

The expansion of IR35 rules “against such an uncertain backdrop” would be a mistake, says small business group

The move would shift responsibility for determining worker status from contractor to employer. This would make hiring sole traders less appealing, according the Federation for Small Businesses (FSB).

"Against such an uncertain backdrop, the self-employed certainly don't need an IR35 rule change that makes hiring contractors less attractive. We've already heard noises from big corporates to indicate that, if this change does take effect in April as planned, they'll pull the plug on sole traders,” said Mike Cherry, national chairman of the FSB.

“Common sense dictates that a delay to the April roll-out of these rules is now needed."

The existing off-payroll working rules were introduced in 2000 to stop taxpayers avoiding employment taxes by working through their own companies. They were toughened up for the public sector in April 2017 when responsibility for deciding whether the rules apply and for deducting the appropriate taxes passed from the individual contractor to public authorities.

In the wake of TV presenter Lorraine Kelly winning a £1.2m tax case against HMRC, the Revenue lost another high-profile IR35 case against Loose Women presenter Kaye Adams in April. In the case of Adams, it had argued that she was a BBC employee and not a freelancer and should be taxed under IR35. This was ruled against by the First-tier Tribunal.

Last month, however, former BBC presenter Christa Ackroyd lost her appeal against a ruling that she was an employee, not a freelance contractor, when she worked for the BBC.