The UK government has confirmed a six-week review into the controversial tax proposals which threaten to drag thousands of freelancers into PAYE.

The government have announced that they will be carrying out a review of the IR35 tax legislation proposals that are set to come into force in April 2020.

The review is scheduled to run through to mid-February in order to make sure that the change and any further steps are implemented smoothly.

However, the news of the review was not met warmly by freelancers, who have called it “an insult” and claim HMRC is intent on enforcing its controversial reforms whatever the outcome.

Julia Kermode, the chief executive of The Freelancer & Contractor Services Association (FCSA), criticised the government for limiting the scope of the review and for not dedicating enough time to consider the full impact the IR35 change will have on freelancers. She said:

“This seems to be another meaningless review from a government who seems intent on bulldozing ahead with its plans anyway. They are expecting the review to be completed by mid-February which is simply not long enough to consider the deeply complex range of issues that the off-payroll legislation is throwing up.

“We have also learned today that the review will focus on the implementation of the reforms rather than the reforms themselves, which is not what was suggested and is not what is needed. I fear that today’s pledge is simply the government paying lip-service to empty election promises and nothing short of an insult.”

Financial secretary to the Treasury, Jesse Norman said:

“We recognise that concerns have been raised about the forthcoming reforms to the off-payroll working rules.

“The purpose of this consultation is to make sure that the implementation of these changes in April is as smooth as possible.”

What is IR35?

As it stands, when a freelancer is employed via a personal service company, they determine if the IR35 tax rule should apply. From April onwards, that responsibility will move to the freelancer who will determine their employment status.

Due to this change, many freelancers fear that they will now be charged more through a higher tax payment as well as facing larger charges from companies or employers they have been working for.

This change by HMRC could reduce workers net income by up to 25%, and could also result in larger companies not wanting to use freelancers due to the cost impact.

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