Freelancers warned that prime minister Truss’s IR35 review ‘might be a stretch’
At best overpromising or at worst -- actively telling the self-employed some things that she knows simply can’t be delivered.
That’s the initial verdict from advisers to freelancers on prime minister Liz Truss, who has beaten former chancellor Rishi Sunak to the Tory leadership, to take over at Number 10 from Boris Johnson.
'Might be a stretch'
But having promised over ‘100-plus policy points’ to somehow be delivered in two years or less, Truss delivering on her vow to review IR35 “might be a stretch,” accountant James Poyser cautioned to FreelanceUK.
Boss at inniAccounts, Poyser isn’t alone in thinking that Truss, a qualified management accountant, might make good on her promise to reverse the National Insurance Contributions, but may not necessarily do anything meaningful on IR35.
“My view on Truss’s vow to review IR35 is sceptical at best,” says chartered accountant Helen Christopher, chief operations officer at Orange Genie Accountancy.
“Either she or her new chancellor Kwasi Kwarteng may well order a review of the off-payroll rules, but I am not so sure it will deviate much from the government line of ‘everything is fine.’”
'IR35 doesn't work'
But everything is far from fine. Welcoming Truss’s appointment as PM, chief executive of the REC, Neil Carberry said: “We welcome the prime minister’s [already committed to] focus on reducing NI and on reviewing the application of IR35 as it doesn’t work, and we need legislation that supports flexible working.”
Ryan Dawson, a manager at Kingsbridge confirms the disarray on the ground caused by the Intermediaries legislation, as he says organisations hiring freelancers as being “besieged with IR35 challenges.”
'Giving hope to self-employed'
Alongside her pledge to reverse Mr Sunak’s April 2021 rise in NICs, and given her promise of a “business revolution”, Dawson acknowledges Truss is “giving hope” to the self-employed.
And Seb Maley, CEO of Qdos says such sole traders absolutely need a boost from the government.
Seeming to allude to patchy government support for those who work for themselves during covid, Mr Maley says: “For far too long, freelancers, contractors and self-employed workers have been overlooked by the government. And [they have been] hit with short-sighted tax reforms and hikes that threaten this way of working.”
'Quite a lengthy to-do list'
But speaking to FreelanceUK, Tax Watch researcher Alex Dunnagan echoed the sentiments of Poyser and Christopher -- that freelancers shouldn’t hold their breath for a an IR35 rethink.
“I agree with the consensus. I don’t see there being any sense of urgency around an IR35 review,” Dunnagan said.
“The new PM does not have significant political capital. It’s important to remember that the majority of MPs backed Sunak -- not Truss. And she has quite a lengthy ‘to-do’ list.”
The researcher was referring to the fact that while Truss won 57% of Tory party member votes (versus a better than expected 43% for Mr Sunak), she amassed 24 fewer votes in the House of Commons’ vote to decide the final two.
'Harming the economy'
Mr Sunak surpassing expectations appears to explain why he isn’t leaving politics, but reportedly fancies his changes at potentially challenging Truss at the next election, especially if his critical assessment of her £30billion tax reduction package proves correct.
But in the interim, Ms Truss could impress by doing a lot of the work that compliance organisation Professional Passport says Mr Sunak’s Treasury, and its bedfellow HMRC dragged its feet on.
“We want to see her leading the way to bring government bodies like HMRC and The Treasury into the 21st century so that they can truly start to address issues like the disguised remuneration schemes and tax avoidance schemes that are harming the UK economy,” says Professional Passport CEO Crawford Temple.
“She could start by working more closely with compliance bodies. HMRC has been woefully inadequate in stamping out these dodgy schemes and as we face a cost-of-living crisis, an energy crisis and a real recession then combined this will create a perfect storm for [freelance] contractors to be tempted into schemes that are still being allowed to thrive and put workers into real financial hardship in the long run. Boris Johnson stood by and Liz Truss must now act.”
Addressing the specific prospect of an IR35 review, Mr Temple said it was “very relevant” to freelancers but described it as a ‘historic situation.’
Capturing the consensus -- again on whether freelancers will see reform to IR35 reform, choosing his few words carefully, Chris James, head of limited company accounting at Workwell said: “We’ll see.”