The former leader of the House of Commons Mel Stride has called for the removal of the “dreaded” IR35 tax rule.
According to the Financial Times, ex- leader Stride challenged the government’s plans to alter the off-payroll legislation at a committee meeting held yesterday (21 October), stating: “I think we all agree this [IR35] is best abolished as soon as possible.”
It comes as new IR35 rules are set to be imposed in April 2021, and under these terms every medium and large private sector business in the UK will be placed in charge of setting the tax status of their contract workers.
The changes to the off-payroll rules were due to come into effect on 6 April 2020, however, the date was pushed back to help businesses deal with the economic impact of Covid-19.
Currently the payroll rules only apply to the private sector, but the outlet reported that the HMRC said reform has been always necessary to address “fundamental unfairness” surrounding non-compliance, this is despite widespread calls for the changes to be removed completely.
Dave Chaplin, chief executive of Contractor Calculator told the FT he was “cynical” about the prospect of change following yesterday’s meeting.
He said: “Everyone has been talking about the need to do away with IR35 for 20 years. This is nothing new.
“Unfortunately, the political will isn’t there to change matters, even if the potential outcome is a functioning tax system.There are also many politicians who run their own companies and would be subject to higher taxes if the playing field changed. The hens don’t tend to vote to get their wings clipped.”