Former Chancellor of the Exchequer George Osborne had started making changes that affected IT contractors and other public sector contractors. However, after the surprise Brexit vote, Philip Hammond has taken over as the new Chancellor, and contractors want to know more about his position pertaining to IR35 and the contracting industry.
Hammond has played a key role in IR35, the legislation that prevents contractors from working as permanent employees and enjoying tax benefits offered to their limited companies.
The new Chancellor will play a major role in leading negotiations with the EU after Brexit to ensure that he gets the best possible deal for British businesses. His role will also encompass making sure that UK contractors can access EU markets, and this is why many IT contractors and others will be watching his decisions and moves very carefully.
Hammond was the Shadow Chief Secretary to the Treasury twice. It was during his second stint from July 2007 to May 2010 that the Conservatives put forth a proposal to abolish IR35 and the Managed Service Companies legislation, with the aim to reduce the red tape that contractors are often subjected to. IT contractors may be surprised to learn that Oliver Letwin, the then Shadow Chancellor, had started proceedings in January 2015 to remove IR35. However, nothing happened with regard to IR35, and IT contractors and others from the contracting industry became liable for Managed Services Companies debts.
It is anticipated that public sector contractors, including IT contractors, working via Personal Service Companies and Limited Companies will have to face stringent rules if the recommendations by HMRC come into force from April 2017. Contractors are hoping that this won’t come to pass with a new Chancellor at the helm.
However, many experts from the contracting industry believe that the contractor legislation will not be a priority for Hammond as he will be busy concentrating on EU negotiations.