IR35 to be repealed
The Chancellor of the Exchequer, Kwasi Kwarteng, has announced that IR35 will be repealed in April 2023.
It's worth noting that the next Finance Bill needs to be drafted, laid before the House for a first reading and will then have to go through Parliament before receiving Royal Assent (probably sometime in February) so, in the meantime, current rules are still binding. Assuming that it is repealed then the original IR35 legislation is likely to remain after April 2023, although we'll have to wait and see what the legislation says once drafted. HMRC will be able to pursue claims for unpaid tax under the current regime even once the law has changed.
Once the current legislation has been repealed will it be possible for a contractor to claim that they fall outside IR35 when they were previously deemed to fall inside it? If the factual situation hasn't changed then it's hard to see how such an argument could succeed. If the end client agrees then there's a possibility that, amongst other things, they may be exposed to being a party to a fraud on the Revenue. There's also the issue of organisations who decided to bring their contractors on board as employees and what will happen to them once the current IR35 legislation has been repealed. Will they want to revert back to contractor status and, if this is the case, how will an organisation implement this?
The Chancellor's announcement has thrown up a number of questions that it's currently very difficult to answer until we know what the draft Finance Bill says. We'll keep you posted with developments as and when they arise.