Chapter 10 Off-Payroll rules to be repealed from 6th April 2023 – Chapter 8 IR35 rules remain.

In his “mini budget” today set out in the Growth Plan, the Chancellor has announced that the changes to the IR35 / Off-Payroll rules that were implemented in 2017 for the public sector and 2021 for the private sector, will be repealed from 6th April 2023.  This means that limited company contractors across the board will be back to being responsible and liable for deciding their own IR35 status.

This is the best news for contractors, agencies and end clients of all sizes in both the public and private sectors.  A day for celebration indeed.

At last we have a Chancellor and a government that, rather than constantly repeating the mantra that the off-payroll reforms are a success, can see that they have been a disaster for all concerned and a very costly one.  Having worked with IR35 for 22 years and been involved with all past reviews and consultations, including as policy advisor to the OTS the advent of Chapter 10 was a very dark day, which resulted in an enormous burden to all businesses.  This includes HMRC with no mechanism to ensure that the correct levels of tax and NIC are charged and of course the embarrassment of the public sector “owing” £Millions in tax and NIC for using HMRC’s CEST tool incorrectly.

Chapter 10 is so complicated that deciding IR35 is extremely onerous.  All businesses including contractors, agencies, end clients and consultancies will be freed from this enormous burden and from the risks of getting IR35/Off-payroll rules wrong in both the public and private sectors.  It is also bound to have a very positive effect on tax avoidance, for example on the few unscrupulous Umbrella companies and numerous avoidance schemes that have emerged as a result of Chapter 10.  Above all we should see a return to contracting for all those subject to blanket bans on using limited companies such as the banks.

The Growth plan is a breath of fresh air and doing things differently has been long overdue.  Exciting times indeed.

We need to await the detail on the repealing legislation and don’t forget it is still in place until 5 April 2023 but If you need to understand anything IR35/Off -Payroll in more detail and how these changes will affect you, please don’t hesitate to contact us and speak to one of our experts.

Kate Cottrell – Managing Director, Bauer & Cottrell