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Will Parliament run out of time to pass the off-payroll legislation?

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The legislation that will amend the current off-payroll/IR35 administrative rules is due to come in on April 2020 and will be introduced in Finance Bill 2019. Under this legislation, where an individual works for a medium or large-sized private sector engager or in the public sector through an intermediary such as their own personal service company (PSC) and they fall within the rules, tax and national insurance contributions will be deducted from them as a deemed employee.

The off-payroll rules were introduced for public sector engagers in April 2017 and were originally proposed to be introduced in the private sector in April 2019, but where delayed following the consultation period. Could we now see a further delay?

Certainly, it would be welcomed by many, even though both the government and HMRC have given clear indications this is unlikely; but is it?

Normally a Bill is a proposed law which is introduced into Parliament. Once a Bill has been debated and then approved by each House of Parliament, and has received royal assent, it becomes law and is known as an Act. When the draft legislation came out, we were led to believe that the Finance Bill would receive royal assent in November 2019, arguably giving everyone plenty of time to prepare before an April 2020 start date. 

With the Supreme Court ruling that Parliament was unlawfully prorogued, the House of Commons will resume its business [this week]. However, with the possibility of a further prorogation ahead of a Queen’s speech, a possible general election and, of course, Brexit, Parliament might just run out of time to pass the bill in enough time for a sensible April 2020 start date.

The normal progression of Finance Bills through Parliament in recent years has taken around 100 to120 days alongside other Parliamentary business, although FA 2015 and FA 2017 were rushed through before general elections in less than half the time normally taken.

Interestingly FA 2017, which contained the IR35/off-payroll rules for the public sector, took just 71 days from first reading to royal assent, which meant that we only had the final legislation in March ahead of an April 2017 start date. This left those affected little time to prepare for the changes with any certainty and the tight Parliamentary timeframe arguably also resulted in some of the amendments we see now in the current Finance Bill 2019/20, such as the appeal process and status determination statements.

The need for further legislation rectifying changes has not been uncommon in recent years, which suggests therefore that the quality of legislation is potentially impacted by the time it has before Parliament for scrutiny.

With up to 60,000 engager organisations (outside the public sector) and around 230,000 PSCs in scope of this new legislation, which includes some complex clauses, there is likely to be uproar if the legislation and technical guidance is not prioritised by Parliament with the aim of finalising and issuing at as soon as possible after Christmas. 

Susan Ball, RSM UK (RSM UK’s Weekly Tax Brief)
Issue: 1458
Categories: In brief