Lib Dem 2024 election manifesto pledges to review off-payroll working IR35 reforms

The Lib Dems target IR35 in their 2024 election manifesto, by pledging an off-payroll working rules “review” if they win on July 4th.

Published yesterday, the manifesto pledge formalises a promise made on TV last month by the Liberal Democrats’ deputy leader Daisy Cooper.

But beyond reiterating what was said by Cooper (currently the Lib Dems’ candidate for St Albans), the manifesto doesn’t add much.

It simply pledges to “review the government’s off-payroll working IR35 reforms, to ensure self-employed people are treated fairly.”

'For a Fair Deal'

The aim fits with the Lib Dems’ manifesto title – “For a Fair Deal,” and the IR35 review pledge is under “The economy - more detail.”

But the lack of new detail on the pledged IR35 review may be why, on balance, contractor advisories are only just about in favour of it.

Bauer & Cottrell says it is surely “positive” for contractors that the first published manifesto of the 2024 election “mentions” IR35.

Workwell Enterprise says Lib Dem leader Ed Davey previousy demonstrating a good knowledge about IR35 signals "any review would be taken from a considered position.”

And IPSE says merely promising to review the April 6th 2017 and 2021 frameworks “acknowledges that there’s a problem with the rules.”

'Lib Dem IR35 review -  on its own - won't achieve anything meaningful'

But all three advisories also shared not insignificant reservations with ContractorUK.

Fresh from calling from this website on Friday for IR35 reform to be axed entirely, IPSE’s director of policy Andy Chamberlain said yesterday:

“It’s more than we’ve seen so far from Labour or the Tories…[but] a review on its own will not achieve anything meaningful.

“The next government must be prepared to take bold action on IR35 -- and that includes scrapping the rules altogether.”

'Complicated matter'

Workwell Enterprise boss Andrew Webster says he too will “wait to see if the other parties prioritise” IR35 in their manifestos.

“But a commitment…to review IR35 /OPW for the purposes of ensuring the self-employed are treated fairly will in reality be a complicated matter,” Webster cautions.

“There are significant other stakeholders, such as HMRC and the Treasury.

“They will have an interest in the scope of any proposed IR35/OPW review. And subsequent recommendations of change.”

'IR35 issues and complexities remain'

Yet it is the pile of existing reviews into the very same issue which bothers Bauer & Cottrell director Charlie Hemsworth.

“Despite these [numerous and] extensive reviews, the practical issues and complexities surrounding the revised IR35 rules have remained largely unaddressed,” Hemsworth says.

“It’s possible that a review based on fairness COULD lead to reform. But I can’t see anything being identified that hasn’t been identified already. 

“So we’d like to see a focus on reforming and implementing recommendations from previous reviews. And addressing all of the issues identified time and time again.”

'No point in another IR35 reform review'

CEST expert Rebecca Seeley Harris couldn’t agree more that another review will just unnecessarily add to the evidence mountain.

“There is no point in another review into IR35 [reform],” the founder of ReLegal Consulting told ContractorUK last night.

“There have been many reviews over the years, and there is more than enough existing information for the Lib Dems to either move ahead with abolishing IR35 [reform] or amend it.”

'Far less complex'

Amending the OPW rules should be done to make them “far less complex” or to offer “more certainty” to end-clients or contractors, Seeley Harris said.

“The goal [if there has to be another IR35 reform review] should be adequate action to improve and simplify its practical application,” echoed Bauer & Cottrell’s Ms Hemsworth.

“That should extend to how the OPW legislation is enforced by HMRC. The result would ideally be a fairer tax system with a benefit to the contracting community and the UK economy as a whole.”

'Sensible, and necessary to have an OPW legislation review'

Former tax inspector Carolyn Walsh isn’t so sure, arguing that with no OPW review, there is no up-to-date record of the legislation’s unintended consequences.

She told ContractorUK: “A review of the legislation is not only a sensible place to start but it’s also a necessary requirement otherwise laws cannot be amended to address societal changes, even unwanted ones.

“For example, in the case of revised IR35, the overblown reaction which hirers had and continue to have [warrants proper and independent scrutiny].

“The reform was intended to stop workers being encouraged to set up limited companies by their employers -- not to stop genuine freelancers from legally and effectively fulfilling contracts via their own companies, which is largely what has happened.”

'Contractors will still embrace Lib Dem IR35 review-pledge even if it's an empty election promise'

Walsh believes contractors will feel glad to have one of the main political parties vowing to put the unwieldy framework under a microscope.

“It doesn’t matter if it’s an empty election promise by the Lib Dems,” said the ex-tax official. “Even if this IR35 review pledge has just been done to ‘Keep up with The Jones’ -- aka the Labour Party -- it keeps the need for a review in view.”

An Ed Davey-led government also pledged yesterday to “end retrospective tax charges such as the loan charge;” raise the tax-free personal allowance, and close CGT loopholes "exploited by the super wealthy."

'End the false economy of NHS agency workers'

For a Fair Deal adds that a Lib Dem government would force public sector agencies and contractors with 250+ employees to join the prompt payment code, “making it enforceable.”

On top of fixing the visa system to address labour shortages, and “ending the false economy” of agency workers on the NHS, the Lib Dems would additionally establish a Worker Protection Enforcement Authority (in effect, the Single Enforcement Body, previously floated to regulate umbrella companies).

Should he become PM, Mr Davey says a new ‘dependent contractor’ employment status in between employment and self-employment would be created in the UK, as would a review of the tax and NICs which employees and “freelancers” pay, to ensure “fair and comparable treatment.”