Off-payroll Working Rules

Oral Answers to Questions — Treasury – in the House of Commons on 2nd July 2019.

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Photo of John Baron John Baron Conservative, Basildon and Billericay

What steps his Department is taking to tackle stakeholders’ concerns on the roll-out of the off-payroll working rules to the private sector.

Photo of Jesse Norman Jesse Norman Financial Secretary to the Treasury and Paymaster General, The Financial Secretary to the Treasury

In response to stakeholder representations at Budget 2018, the Government announced that the extension of the off-payroll working rules reform would not take effect until April 2020. That was designed to allow organisations more time to prepare. The reform will also not apply to the smallest 1.5 million organisations. The Government have now consulted on the detailed design of the reform. Responses to that consultation will be taken into account when drafting the legislation.

Photo of John Baron John Baron Conservative, Basildon and Billericay

Nevertheless, there are concerns within the private sector about the forthcoming adoption of IR35. What lessons are there from its application to the public sector?

Photo of Jesse Norman Jesse Norman Financial Secretary to the Treasury and Paymaster General, The Financial Secretary to the Treasury

That is a very important question. I hope my hon. Friend will be reassured. Independent research shows that the public sector reform has been meeting its objective of improving compliance with existing off-payroll working rules without disrupting public services or reducing labour market flexibility. The Government recognise that the private sector is much more diverse, but HMRC will continue to work with stakeholders to improve employment status checks and associated guidance. It will also provide a significant package of education and support to businesses to help with implementation.

Photo of Martyn Day Martyn Day Scottish National Party, Linlithgow and East Falkirk

It is only correct that contractors pay their fair share of tax, but the IR35 rule fails to equalise tax equally between them and employees, and is overly bureaucratic. Will the Minister join me in urging the Chancellor to ensure that the 2019 Budget and Finance Bill improve the rule or scraps it altogether?

Photo of Jesse Norman Jesse Norman Financial Secretary to the Treasury and Paymaster General, The Financial Secretary to the Treasury

I am sure the hon. Gentleman will be aware that there is only about a 10% compliance rate with proper tax payable in this sector. He should therefore be applauding, as I am, the means to raise the level of compliance. In many ways, this is a simplification of the rules, which is being carefully and deliberately handled.