The Treasury has today announced that the IR35 reforms will be phased out from 6 April 2023.

This means that contractors working through intermediaries will be responsible for paying taxes and insurance premiums.

The move reverses reforms first introduced in 2017 for the public sector and then extended to the private sector in 2021.

They saw that the responsibility for development, if the contractor is employed or self-employed, falls on the shoulders of the end customer, not the contractor.

The government says scrapping these rules will help make the tax system simpler.

IR35 Shield chief executive Dave Chaplin says: “These heavy-handed reforms have never worked and were wrong from the start. The recent Atholl House Court of Appeal case further highlighted the law’s structural flaws.

“The new version of IR35 just served to glue the economy and prevent growth. The chancellor did the right thing and relieved firms of the unnecessary burden of trying to solve a complex puzzle every time they hire an employee. “

And Professional Passport chief executive Crawford Temple comments: “These new rules have cost companies millions of pounds to implement, so it’s disappointing that the warnings were not heeded before going ahead.

“The government should have recognized this by now. However, there is an urgent need for the Government to press HMRC to provide detailed guidance in relation to today’s announcement regarding the application of the Managed Service Companies (MSC) legislation.

“I would go further and propose an urgent review of both IR35 and MSC legislation so that contractors are not inadvertently working under schemes that will apply full PAYE to their earnings from April. IR35 is flawed and the government needs to start with a clean sheet of paper and develop a strategy for the modern workplace.”

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