Budget

Accountants want IR35 reforms scrapped, says FreeAgent

Accountants are wary about the impact that the government’s IR35 off-payroll tax reforms will have on the UK’s contracting industry and would like to see them repealed altogether, a new survey has revealed.

According to research by FreeAgent, which provides cloud accounting software for small businesses and accountants, an “overwhelming” 95% of UK accountants believe that the reforms will have a negative impact on the UK’s contracting industry when they are implemented in April.

Under the reforms, medium or large-sized companies in the private sector would be forced to take responsibility for checking whether any contractors they hire should be taxed in the same way as employees.

The government believes this will reduce the amount of ‘disguised employment’ in the UK, although critics argue it will be an unfair burden to place on businesses.

FreeAgent’s research found that more than two thirds (67%) of respondents said they believe that the proposals will have a negative impact on the UK accountancy profession.

In addition, 84% of accountants said they would like to see the IR35 reforms abolished completely by new Chancellor Rishi Sunak in his debut Budget speech.

More than half (59.3%) of respondents also said that they did not think their own clients properly understood the reforms to private sector IR35, while less than a third (29.3%) said that they believed their clients did understand the changes.

Ed Molyneux, CEO and co-founder of FreeAgent, said: “Legislative changes are often greeted with apprehension, but it’s startling to just how strong the level of resistance is among accountancy professionals to these forthcoming IR35 private sector reforms.

“The fact that the overwhelming majority of accountants we surveyed said they thought the reforms would not only have a detrimental impact on the UK’s contracting industry but also the accountancy profession, is a pretty damning indictment of the legislation.

He added: “Clearly the profession is bracing itself for the worst once the reforms come into effect, which may be why so many accountants say they want to see them abolished completely in this year’s Budget.

“Although the House of Lords is currently carrying out an inquiry into IR35, it looks unlikely that this will actually have any impact as the reforms are still scheduled to come into effect in April.”

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