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Conservative MP calls for cancellation of IR35

David Davis, the MP for Haltemprice and Howden, is urging for the off-payroll working rules known as IR35 to be cancelled.

Writing for the Telegraph on June 13, Davis noted how voters typically vote with their pockets and are even more likely to do so during the cost-of-living crisis.

“Most elections are decided on economic issues, and the next will be no different,” writes the MP.

Urging for a cancellation of IR35, Davis continued that jobs, wages, standard of living, all require a serious plan.

“We need a tax structure that encourages investment and rewards hard work. The much-touted 2 percent off income tax would be a start, but is not enough by itself.”

IR35 is tax legislation which is designed to stop contractors working as ‘disguised employees’ by taxing them at a rate similar to employees. It became law in 2000 through the Finance Act.

Reforms to IR35 were introduced in April 2021, as a crackdown on tax avoidance. The amendments included requiring workers regularly working with the same contractors to be counted as PAYE staff, or face action from HMRC. Critics of the reforms say they will have a negative impact on the self-employment model, reducing the income of the self-employed and forcing many out of self-employment.

Plans to repeal the off-payroll IR35 reforms were announced by Kwasi Kwarteng in his mini-budget in September 2022. However, the plans were scrapped in the autumn 2022 by the Chancellor Jeremy Hunt.

The U-turn was criticised by some. The Association of Independent Professionals and the Self-Employed (IPSE), which has been campaigning against IR35 for 20 years, said the axing of the plan would be a “huge blow” to thousands of self-employed contractors and the businesses they provide services to.

Andy Chamberlain, Director of Policy at IPSE, said: “The reforms to IR35 have created a nightmare for businesses seeking to engage talent on a flexible basis, while simultaneously forcing individuals out of business altogether.”

“Businesses that were looking forward to an era of less complexity and less cost will have had those hopes dashed today. Our fear is this decision will lead to yet more work being off-shored to other territories and more people being forced to work through unregulated umbrella companies. The supposedly pro-business Conservative government has sent out a clear message today – it does not support people who work for themselves,” Chamberlain added.

David Davis’s comments about the axing of IR35 as an election winner for Conservatives have been welcomed for some.

Among them is Dave Chaplin, CEO of  IR35 Shield, who said: “When I led the Stop The Off-payroll Tax Campaign, I was told that the reason the delay vote on 1st July 2020 was prevented from getting enough votes, was due to personal intervention by Boris Johnson. But, as David Davis MP says, that circus has now left town.

“Out of the near half a million contractors, due to be affected by IR35, only 3,868 joined the campaign and tried to fight. Imagine what would happen if the other 496,000 spoke to their MPs as we head into the next election. It’s game on.”

Jenny Neve

Jenny is the Business Development Director responsible for generating new and existing partnerships with Bailey Montagu’s high profile clients.