Government curtails Lords’ IR35 inquiry by ruling out April 6th delay

A Lords inquiry’s questions about private sector IR35 reform are starting to sound redundant, in light of the government deciding to forge ahead with the April 6th rules, “come what may.”

At its third oral evidence session, the inquiry’s chair Lord Forsyth effectively asked the three expert witnesses if HMRC should go back to the drawing board with the off-payroll regime.

All agreed. In fact, John McVay of PACT endorsed “something different”, Dr Iain Campbell of the IHPA backed a “rethink” and Matthew Abrahams of Oil & Gas UK urged “meaningful reconsideration.”

'Really helpful'

But despite these answers last Monday being “really helpful” , by Friday they were entirely moot, as was Lord Forsyth’s question, as the government said there would be no going back to square one.

So in the very same week that experts are giving testimony about a rethink, in response to peers asking about the value of a rethink, HM Treasury said: “The government is [today] confirming its intentions to proceed with the reforms.”

In a statement ushering in “tweaks” to the draft legislation, recommended by HMT’s own Off-Payroll Review, officials reiterated: “The rules…will come into effect on 6 April 2020.”

The statement is likely to end the Lords’ examining alternatives to an April 2020 launch, even though the preparedness of businesses, and the reform’s impact on individuals, clearly concerns them.

For example at Monday’s session, Lord Bridges said he wanted to know how long the public sector was given between knowing the final legislative detail and implementation.   

'Focus on legal aspects of the reform'

Seeming to realise that such considerations have now been overruled (by the government forging ahead), the inquiry’s homepage says its next session will “focus on the administrative and legal aspects of off-payroll reform.”

Other language on the inquiry’s page also indicates an acceptance by the peers that the reforms are now irreversibly incoming from Monday April 6th – as do the types of questions that they will pose to the next expert-witnesses.

The witnesses will give evidence to the inquiry later today, and are appearing on behalf of the Office of Tax Simplification and the Law Society of Scotland, among other organisations.

'Hell-bent HMRC'

No appearance to the Lords has been made by HMRC (it would be standard practice for the inquiry to call tax officials), yet the reams of new off-payroll guidance by the Revenue, plus the HMT review, could be used by the department as justification for not having to attend.

An expert witness from the inquiry’s second evidence session, Julia Kermode of the FCSA, said: “It has been clear to me for some time that HMRC has been hell-bent on planning to implement the off-payroll reforms this April, come what may.

“The publication [on Friday] of their review clearly shows that these reforms are coming whether we like it or not. I can’t see the Budget on March 11th bringing about a U-turn, so it would seem that the House of Lords inquiry into the legislation is the last hope to affect any meaningful change.”