Budget 2018 announced for October 29th

The late Budget 2018 that was expected -- even hoped for by one IR35 adviser -- will now not go ahead.

In an update on its website, the Treasury says Budget 2018 will be delivered by chancellor Philip Hammond on Monday October 29th.

The news of what will represent an early autumn Budget comes as a disappointment for former tax inspector Kate Cottrell, an IR35 specialist.

“I was hoping that the Budget would be delayed, so that whatever 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.  

But by doing the opposite -- holding the Budget early, the government would be able to claim that it has given the private sector a longer time to prepare for IR35 changing (if it wants an April 2019 commencement).

In the public sector, IR35 reform was first unveiled in late November for the April start, but many complained implementation had to be rushed. Even HMRC’s own research flagged up teething problems and costs.

Since then, IR35 case defeats for HMRC, evidence questioning CEST’s reliability and a contractor caught by the reforms winning holiday pay could collectively put private sector IR35 reform on hold however.

“So we could be in for one of those Budgets where nothing is mentioned,” said Cottrell. “[This] ‘nothing’ [would] be on the [official] grounds of [HMRC and government] dealing with Brexit.”

But in reality, a “mountain of paperwork and tax avoidance” has sprung up since the April 2017 off-payroll rules reformed IR35 in the public sector, says Carolyn Walsh, another ex-tax official.

She will meet her local MP on October 12th to “explain how the IR35 reform in the public sector actually played out in practice”, implying she takes issue with HMRCs’ account.

It is the ill-effects of last year’s reform that explain why Walsh, boss of CWC Solutions, believes Budget 2018 will not extend the changes to the private sector, contrary to what BBC presenter Paul Lewis has predicted.

She still anticipates some IR35 changes however, such as hirers having to submit compliance reports to HMRC (similar to the construction sector’s CIS300), under the threat of fines.

Other IR35 reform models have also been tabled to HMRC, which is likely to use Budget 2018 to respond to the consultation as, by then, it will have had more than three months to consider stakeholders’ replies.

“We should get a response to the private sector consultation with the Budget papers, which no doubt everyone affected is anxious to see,” said Cottrell, co-founder of status advisory Bauer & Cottrell.

“If they do decide to go ahead [from April], then there would be an extra month of preparation time for the private sector… we [may find that this is] the only consolation.”

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