Finance Bill leaves businesses with just nine months to prepare for IR35 tax rules

Filed under Press release

Thursday, 11 July 2019


The Finance Bill, published today, confirms that the government plans to go ahead with the implementation of IR35 in April 2020.

Tom Hadley, REC Director of Policy and Campaigns said:

“The government has not taken on our strong recommendation to put its IR35 plans on hold, to conduct a comprehensive impact assessment, and to remove the exemption for small businesses. The draft legislation risks damaging the UK’s productivity and labour market flexibility at a time when it is most needed.” 
“We know from experience that the IR35 rules are a huge problem for employers and contractors alike. Making sure everyone pays the right tax is essential, but the rules need to be clear to be effective. The last thing private sector businesses need at this time of Brexit uncertainty is rushed or poorly-designed tax rules that add further uncertainty to an already fragile business landscape”.

“The government must urgently reconsider its choices and delay changes to IR35 until at least April 2021.”

According to REC members, off-payroll working legislation is among the most difficult tax legislation to understand. With some businesses relying on many thousands of contractors, adjusting to the requirements will be a considerable administrative and financial burden. 

Businesses are facing unprecedented uncertainty. In March, employer confidence in the economy hit its lowest point since the REC’s JobsOutlook survey began in June 2016. Businesses are relying more heavily on contractors as a crucial means of harnessing the right skills and expertise quickly rather than waiting months to fill a vacancy.


Notes to Editors: 

1. The REC submitted key recommendations on IR35 to the Government in May 2019 some of which are below:

  • The reforms should be delayed at least to April 2021.
  • Government should conduct a comprehensive impact assessment of the public sector reform and analyse the potential impact the changes could have on the private sector.
  • There should not be a small companies exemption. 
  • Clients must give their reasons for their status decision at the same time as the status decision.
  • Clients must bear liability for their supply chains.
  • All parties should be able to rely on a statutory process managed by HMRC.
  • An overhaul of the existing CEST (Check Employment Status for Tax) tool.   

2. The IR35 rules were introduced in 2000 to tackle tax avoidance by contractors working with the public sector. Workers who are self-employed but who operate, in essence, as traditional employees (paying a lower rate of tax) are required to be moved on to company payrolls. From April the same rules will apply to private businesses.

3. JobsOutlook is the REC's monthly survey detailing the hiring intentions of UK employers and their confidence in the economy. Available here.

4. The REC has been in discussion with the HMRC about reform of IR35 legislation since its introduction in 2000, as a member of the IR35 Forum. 

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The REC is all about brilliant recruitment, which drives our economy and delivers opportunity to millions. As the voice of the recruitment industry, we champion high standards, speak up for great recruiters, and help them grow. Recruitment is a powerful tool for companies and candidates to build better futures for themselves and a strong economy for the UK. Find out more about the Recruitment & Employment Confederation at 

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