Watchdog Urges U.K. to Address ‘Unfairness’ in Contractor Rules

A U.K. government watchdog has urged the tax authority to address “inherent flaws and unfairnesses” in new tax rules for contractors.

The call came from the House of Lords Economic Affairs Finance Bill Sub-Committee which scrutinizes policies in Britain’s annual government budget in a new report, Off-payroll working: treating people fairly, published today.

• The “off-payroll” rules, known as IR35, aim to ensure that contract workers pay about the same tax and social security contributions as regular company employees. The rules first applied to public sector employers in 2017, and are being expanded to cover private-sector employers starting April 6, 2021.
• The rules were original scheduled to take effect earlier this month but were postponed because of the pandemic.
• “The rules were deferred for a year because of the current crisis, but how prepared will businesses recovering from the crisis be to take on this extra burden on next year?” Lord Forsyth of Drumlean, chair of the House of Lords Economic Affairs Finance Bill Sub-Committee, said. “We call on the Government to announce in six months’ time whether it will go ahead with reintroducing these proposals.”