Fourteen staffing bosses urge Sajid Javid to rethink IR35 reform

Fourteen recruitment company leaders have urgently written to Sajid Javid, urging the chancellor to delay IR35 reform from April and review it comprehensively.

Finding fault with the current, underway review, the 14 say the draft legislation “requires a far more extensive rethink than the limited review set up…on the back of your commitment”.

Backed by the REC, the 14 also tell Mr Javid that two things must happen if he is to stop projects getting “binned” and “taken offshore” due to the rushed, “badly designed” reform.

'Fair and clear'

First, the chancellor must appoint an independent chairperson, “outside of HMRC,” to ensure the reforms will be “fair and clear and not leave [firms] vulnerable to unnecessary tax risks.”

“As with the loan charge review”, states the letter, “this [appointment] would enhance the legitimacy of the government’s final position and win business confidence.”

Second, Mr Javid and his officials must learn the “lessons of the public sector implementation” of IR35 reform -- a recommendation put to HMRC back in June.

“There are ongoing issues with the public sector reform,” the chancellor is told. “These problems need to be fixed before any changes can be implemented in the private sector.”

'Huge opportunties for avoidance'

There is a third, implied move which the bosses of Reed, Hays, Manpower and Harvey Nash, among other agencies, say Mr Javid needs to make -- the regulation of umbrella companies.

“[This] will not be in place in time for April - creating huge opportunities for avoidance.

“At the same time, compliant companies…[will] have only 17 working days between the publication of final legislation on March 11 and implementation on 6 April.”

'Bans smack of no confidence in the IR35 legislation'

Should he need further convincing of the need to rethink, the chancellor is presented the very latest developments from the sector he left to go into politics.

“Major businesses, including most of the banking sector, have already announced they will no longer engage contractors due to a lack of confidence in the legislation.”

The 14, which includes the bosses of Adecco, Randstad and Pertemps further tell Mr Javid: “You have our full commitment to working with you on getting this right.”

Yet they also warn him, “pushing ahead with tax legislation without a considerable review of its impact could severely damage the economy, compliant firms, workers and the tax take.”