Hunt's U-turn on Business Tax Cuts Sparks IR35

Charlie Hemsworth, a senior tax consultant at Bauer & Cottrell, expresses cautious optimism, urging Mr. Hunt not to shy away from addressing the challenges faced by organizations and their hiring practices. The lingering concern over IR35 reforms, particularly Chapter 10 rules and HMRC's contentious Check Employment Status for Tax (CEST), remains a point of contention for contractors. 

 

Hemsworth emphasizes the need for a comprehensive review, stating, "UK plc and the contractor sector need IR35 reform repealed. And the courage to see it through this time." 

 

 

The recent flip-flop on business tax cuts by Chancellor Hunt has added an element of uncertainty to the upcoming Autumn Statement. Initially dismissing the possibility in September, he now emphasizes the importance of cutting business taxes in the wake of stagnant economic growth between July and September, as reported by the Office for National Statistics (ONS). 

 

In an interview on HM Treasury's LinkedIn page, Hunt pledges an Autumn Statement focused on growth, aligning with the submissions from veteran Tories like Sir John Redwood and David Davis, both of whom advocate for the repeal of IR35 reforms. 

 

 

Despite the renewed hopes, Seb Maley, the head of IR35 contact review firm Qdos, remains skeptical. He notes that while there is a consensus among MPs, including Liz Truss, John Redwood, David Davis, and Danny Kruger, on the challenges posed by off-payroll working reforms, there is little evidence that Prime Minister Rishi Sunak is actively considering their recommendations. 

 

Maley emphasizes the need to stimulate growth by reducing the tax burden on small businesses, citing the potential impact on the UK's smallest enterprises. 

 

 

Matt Fryer of Brookson anticipates that if IR35 is addressed in the Autumn Statement, it may focus on specific measures. He suggests that the offset mechanism, designed to prevent double-taxation and scheduled to take effect on April 6th, 2024, could be a focal point. 

 

Fryer states, "This change to the off-payroll working rules will reduce the risk of engaging with outside IR35 contracts and hopefully unlock any outstanding blanket bans on working with [PSC] contractors." 

 

 

The discussion extends to umbrella company regulation, with concerns raised about potential delays in addressing issues within the sector. The absence of an Employment Bill in the recent King's Speech has led some to speculate that changes to umbrella regulations might be put on hold. 

 

Rob Sharp of Orca Pay Group suggests that meaningful developments in umbrella regulation may not occur until the first quarter of 2024, emphasizing the careful consideration required in balancing the diverse opinions and feedback received during the consultation period. 

 

 

As the contractor community eagerly awaits Chancellor Jeremy Hunt's Autumn Statement, the lingering uncertainty surrounding both IR35 reforms and umbrella company regulations keeps expectations tempered. Whether the government will address these issues comprehensively or opt for smaller, incremental changes remains to be seen. Contractors hope for clarity and positive developments, but only time will tell the true extent of Chancellor Hunt's commitments in the upcoming statement.