Spring Statement 2019: The Kingsbridge View

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Author: Kingsbridge
22 Jun 2020 @ 07:46 am

In recent years, the Spring Statement and Autumn Budget have delivered a series of blows to the contracting community. From IR35 reform to the failed attempt to raise NIC payments, the Chancellor’s announcements have had many self-employed workers hiding behind the sofa.

It was with some relief, then, that other more pressing issues (see: Brexit) meant that this year’s Spring Statement seemed very likely to be a quiet one. As expected, that was the case.

Phillip Hammond made no mention of IR35. For the first time, however, this was quite disappointing. Many contractors, recruitment agencies and various end clients have been vocal in their dislike of the proposed reform of the off-payroll rules and their existence does pose a pressing question if the government are as ‘business-friendly’ as the Chancellor has repeatedly stated, shouldn’t they be doing more to help with the changes before they come into force on 6th April 2020?

With a recently published consultation currently taking up the thoughts of many interested parties, Hammond may be biding his time and waiting until after 29th May before putting forward any guidance. Still, the failure to mention the reform in any capacity seems like a missed opportunity.

The changes coming to the private sector are significant and, as we saw from the public sector rollout, it is unlikely to be simple. The Spring Statement offered the Conservatives a chance to encourage businesses to start preparing for April 2020 essential if the transition is to be smooth.

As is stands many are in the dark, and they certainly won’t be any the wiser with a complete absence of any reference to the reform either in his speech or the supporting documents. It is likely that a number of firms in the private sector are in a kind of limbo when it comes to taking on contractors right now unwilling to make decisions or investments due to the forthcoming changes, but hamstrung by their clear need for expert skills and guidance.

With no indication of any delay to the much-maligned Loan Charge 2019 likely to be because of HMRC’s plans to address the concerns by the end of March, observers were left to note that the Making Tag Digital rules are still due to come into force on 1st April 2019. With many of the systems, processes and guidance needed for taxpayers to comply still not in place, it was at least heartening to see that HMRC is willing to take a softer approach to penalties in its first year of implementation.

There were several other announcements which contractors are likely to welcome. The government remain committed to tackling the scourge of late payments which plague the UK’s small businesses. Although a full response to evidence submitted over the last year will be published shortly, an immediate step was taken. As Hammond noted:

As a first step we will require company Audit Committees to review payment practices, and report on them in their Annual Accounts.

There was also a call for evidence on simplifying the process of amending a tax return, and the launch of a strategy to give Britain a full-fibre broadband network by 2033 greatly improving connectivity across the country.

To summarise succinctly: there were no surprises. We already know what’s on the horizon in the shape of IR35 reform, and the focus of the contracting community should firmly be on preparing and educating themselves on what’s to come. Tune in to the Kingsbridge blog in the coming months for a lot more detail on what the forthcoming reforms will mean for you.