IR35 faces Coronavirus delay
30th March 2020
2020 will go down in the history books as the year of Coronavirus. The virus which has claimed tens of thousands of lives (so far) has literally ground people, societies and businesses to a halt. This unprecedented situation has left our streets empty, our schools shut and our economies reeling. As companies grapple with the reality of empty offices, unpaid bills and severed contracts, business leaders are contemplating drastic changes to their working practices. One pressing issue is how to tackle the suspension of controversial tax reforms known as IR35 that were due to come into effect in April 2020.
The proposed reforms have been delayed for the private sector until 2021. The decision was announced on March 17th in the House of Commons, along with an emergency £330bn financial package to bolster the UK economy.
“The government is postponing the reforms to the off-payroll working rules, IR35, from 6 April 2020 to 6 April 2021…in response to the ongoing spread of COVID-19 to help businesses and individuals”, said Chief Secretary to the Treasury Steve Barclay.
IR35 was originally introduced in 2000 to ensure that those working as employees but paid via a Personal Services Company (PSC) would be subject to similar levels of tax as other employees.
The impact of this deferral could hit many businesses who have spent months preparing for the changes by tightening up their hiring practices. Many corporations, including Lloyds, GSK, HSBC and Deutsche Bank imposed a blanket ban on PSCs rather than risking financial and legal liability as IR35 loomed. The delay comes too late for them. They have stopped engaging contractors altogether, but are now faced with an opportunity to re-evaluate their position and potentially return to contractors – little consolation for the thousands of freelancers and sole traders who have already closed their doors as result of the decision.
Many sole traders and contractors who awaited IR35 anxiously, fearing it would undermine their income, have welcomed the delay. They believe the damage would have been even more serious if the proposed changes had gone ahead as planned. The decision to postpone the changes to IR35 for at least a year has brought relief to many with the unexpected prospect of reducing the income loss that has blighted a large proportion of self-employed businesses as a result of the pandemic. We spoke to IR35 specialist Rebecca Seeley Harris last month to explore the impact of the legislation.
So what does this ‘interim’ year hold for employers and contractors? An estimated 20,000 recruitment agencies and other intermediaries who supply staff through PSCs will be putting their IR35 plans on the backburner whilst they tend to more pressing survival strategies. Contractors, sole traders and freelancers are using their enforced ‘down-time’ to contemplate their future employment status and categorisation.
The future is hazy in these strange, unsettling times and the impact of the delay on businesses and contractors is unclear. What we do know is that the government intends to ‘lock-in’ the IR35 changes a year in advance, which will happen as soon as they update the IR35 guidance.
Announcements from the government are imminent and everyone in the business world is watching and hoping for positive tidings.
by William Finden
William Finden is the Founder and MD of Oaklands Global. He is a seasoned executive search and recruitment specialist with over 16 years of experience, dedicated to the international aviation & aerospace markets. William leads Oaklands Global’s C-Suite practice and has had a successful career delivering at the executive level for a diverse portfolio of clientele including Business Jet Operators, OEM’s, MRO’s, FBO’s Airlines and Rotary businesses. To learn more about how William can assist with your next career move or to discuss your next director level hire please contact him by email: firstname.lastname@example.org
In an age of change and constant innovation, we believe in sharing ideas and discussing a variety of trending topics around recruitment, aviation, aerospace & defence and investment banking. Please peruse our library of blogs and articles below
Bridging the Gap: Combating Middle Management Burnout Aviation Amidst the Skills Shortage
27th November 2023
In the dynamic and highly specialized field of aviation, middle management plays a pivotal role in ensuring safe and efficient operations. However, the industry is grappling with a skills shortage that is placing immense pressure on middle managers. This blog is aimed at aviation professionals at the director level and explores the critical issue of middle management burnout due to the scarcity of skilled candidates in the aviation industry.
Attracting quality applicants to your business
14th July 2023
Before we get ahead of ourselves, and you read this blog thinking what the heck is this guy talking about. Let me ask you a quick question. Has your business seen an increase or decrease in the quality or overall volume of candidates applying to job adverts over the last 12 months?
Is aviation finding it's mojo again?
3rd April 2023
Three years on from the start of the first UK lockdown and the end of the first quarter of 2023 seemed like a good time to reflect on the current state of the aviation industry and see if we can now confidently look to the future.