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Finance Bill (Ways and Means)

19 May 2020

Proposing MP
Jesse Norman Con
Hereford and South Herefordshire
Type
Bill Debate

At a Glance

Issue Summary

Jesse Norman moves a ways and means motion to amend off-payroll working rules in the private sector, extending their implementation date by one year to April 2021 due to the coronavirus pandemic. The debate discusses the proposed extension of IR35 rules to the private sector and their potential impact on self-employed contractors. Alison Thewliss discusses concerns about the IR35 tax legislation and its impact on workers in various sectors, particularly IT, rural communities, and the oil and gas industry. The speaker discusses concerns about the Finance Bill's impact on self-employed individuals and those affected by the economic recession. Edward Davey criticizes the UK government's approach towards self-employed individuals, particularly regarding IR35 proposals and lack of support during the coronavirus crisis. Jesse Norman discusses the Finance Bill's measures related to tax reforms, particularly addressing concerns about delays and further reviews.

Action Requested

The Government proposes amending the Finance Bill to delay the reform of off-payroll working rules for medium and large organisations from April 2020 to April 2021. This includes ensuring compliance with existing rules, conducting further research on labour market impacts, and providing support to businesses through HMRC's education and assistance programme.

Key Facts

  • The Government announced the reform extension at Budget 2018.
  • Non-compliance in the private sector is forecast to cost over £1.3 billion a year by 2023-24.
  • The reform affects medium and large organisations but not engagements with the 1.5 million smallest businesses.
  • Independent research on public sector effects will be commissioned for further review.
  • The IR35 rules have been applied to the public sector since April 2017.
  • The Labour party supports delaying the reforms but wants a proper and thorough review before implementation.
  • HMRC estimates that bogus self-employment schemes cost around £3 billion annually in lost tax revenue.
  • Alison Thewliss supports a review of the IR35 tax legislation.
  • The House of Lords Economic Affairs Committee recommends reassessing the IR35 framework.
  • IT workers in Thewliss's constituency are experiencing contract non-renewal due to ongoing uncertainty.
  • The Taylor Review provided options for addressing employment rights issues.
  • The Office for Budgetary Responsibility predicts an economy shrinkage by up to 35%.
  • Unemployment is expected to rise to 2 million, with youth unemployment reaching 1 million.
  • Research shows 83% of New Starter Justice campaign members received no universal credit in April.
  • 350,000 to 500,000 hospitality workers remain ineligible for furlough support despite the extension.
  • The Institute for Fiscal Studies estimates 2 million freelancers and 675,000 people with over half their income from self-employment are not covered by current schemes.
  • Local government emergency funding is £3.2 billion short of a required £10 billion.
  • The government's approach creates 'zero-rights employment'.
  • There was a promise during the last general election campaign for a review, which has not been fulfilled.
  • IR35 measures are expected to cost the Treasury due to people leaving the country and ending up going abroad.
  • The Government has accepted 53 recommendations from the Taylor review, several of which have already been implemented.
  • A review was conducted earlier in the year following two processes of consultation, draft legislation, and pre-legislative history.
  • Two pieces of research are planned: one on public sector effects by April 2021 and another assessing private sector impacts six to twelve months post-reform implementation.
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