Simply Business homepage
  • Business insurance

    Business insurance covers

  • Support
  • Claims
  • Sign In
Call Us0333 0146 683
Our opening hours
Knowledge centre

IR35 review confirms “light touch” for first 12 months – but no delay

2-minute read

Sam Bromley

27 February 2020

Share on FacebookShare on TwitterShare on LinkedIn

The Treasury’s IR35 review has finally been published. Contractors hoping for a delay to the rules will be disappointed, as the document confirms off-payroll changes will go ahead on 6 April 2020 – with some (small) concessions.

A softer IR35 approach for the first 12 months

The IR35 review confirms the government will implement the change as planned on 6 April. But there are some small concessions for contractors and their clients including:

  • a “softer approach” to compliance in the first year of reform, where no penalties will be due for inaccuracies, unless HMRC suspects deliberate non-compliance
  • more “signposting” to HMRC’s guidance, “as well as explaining the changes through webinars, letters, workshops and other material”
  • an update to the legislation to clarify the time limits for the “client-led status disagreement process” as well more guidance “to make the appropriate use of this process clearer”

Read the Treasury’s full IR35 review.

Why was there an IR35 review in the first place?

The upcoming rule change means medium and larger-sized businesses will be responsible for determining a contractor’s tax status, rather than the contractor themselves.

But the self-employed fear it’ll harm their flexibility, for example if big businesses make ‘blanket assessments’ of contractors to minimise risk. HMRC also doesn’t have a strong record of interpreting its own rules.

That’s why contractors took notice when the Conservatives promised a “proper review” of IR35 during their election campaign.

But the review is “recklessly inadequate”

The self-employed sector has criticised the review. Sophie Wingfield, from the Recruitment & Employment Confederation, said: “What’s obvious from this is that the Treasury know IR35 is not quite right. Rather than tinkering around the edges of this complex legislation, we need the government to delay implementation until 2021 to make sure it’s done properly.”

IPSE’s Andy Chamberlain was more scathing, calling the policy “catastrophic”.

A new Chancellor, but nothing more than “tweaks and improvements”

The Treasury has published its review following Rishi Sunak’s recent appointment as Chancellor. There was hope he could delay the reform, but the review means we shouldn’t expect any significant IR35 announcements in his Budget on 11 March.

Prior to the review’s publication, the Chancellor said he’d been working with HMRC “to ensure that they are not going to be at all heavy-handed for the first year” and promised the review would “have some tweaks and improvements to make sure the transition is as seamless as possible”.

Now those tweaks and improvements have been announced, the question is – do they go far enough? Let us know in the comments below.

Do you need IT contractor insurance?

As one of the UK's biggest business insurance providers, we specialise in public liability insurance and professional indemnity insurance. Take a look and build a quick, tailored contractors insurance policy.

Start your quote

We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer

Find this article useful? Spread the word.

Share on Facebook
Share on Twitter
Share on LinkedIn

Keep up to date with Simply Business. Subscribe to our monthly newsletter and follow us on social media.

Subscribe to our newsletter


Popular articlesBusiness resources from FarillioGeneral businessGuestInsuranceLandlordLandlord resources from FarillioLegal and financeMarketingNewsOpinionProperty maintenanceTradesmanCovid-19 business support hub


6th Floor99 Gresham StreetLondonEC2V 7NG

Sol House29 St Katherine's StreetNorthamptonNN1 2QZ

© Copyright 2022 Simply Business. All Rights Reserved. Simply Business is a trading name of Xbridge Limited which is authorised and regulated by the Financial Conduct Authority (Financial Services Registration No: 313348). Xbridge Limited (No: 3967717) has its registered office at 6th Floor, 99 Gresham Street, London, EC2V 7NG.