IR35 Review: More Clarity for Recruiters on Small Business Exemption

The Treasury has published its review of changes to the off-payroll working rules (IR35) this morning. 

This includes confirmation that small businesses will have an obligation to declare whether they are exempt from the rules and also confirms that HMRC will take a ‘light touch’ approach to enforcement in the first year. 

Sophie Wingfield, Head of Policy and Public Affairs at the Recruitment and Employment Confederation, said: 

“It’s a positive move that the Treasury is putting the obligation on small businesses to declare whether the IR35 rules apply to them. This is a direct response to what the REC has been calling for and should provide recruitment businesses with much needed clarity on their obligations.”  

In relation to the decision by HMRC to take a ‘light touch’ approach to enforcement, Sophie Wingfield said:

“Taking a ‘light touch’ approach to enforcement in the first year will create more problems than it solves. The consequences of not complying with tax law should be clear. Not doing so could create an unlevel playing field where compliant employers lose out to unethical ones. We need to see more details about how this approach will work in practice. 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.”