Conservatives would look again at ‘how to reform IR35′

Shadow Business Secretary Andrew Griffith’s pledge to reform IR35, announced on Monday has reignited debate over the controversial legislation.

Qdos, has responded to the Shadow Business Secretary’s speech at the Conservative Party Conference in which the Party pledged to look again at “how to reform IR35” – as part of its aim to “do better for the self-employed” and “support a new generation of entrepreneurs” – if it was to win the next general election.

Qdos CEO, Seb Maley, said, “Promising to look again at IR35 reform as part of a wider pledge to support those working for themselves makes nice headlines – but the devil would be in the detail. “Given how damaging IR35 reform has been for some, this latest pledge will be music to the ears of many freelancers, contractors and consultants – not to mention businesses. Others, though, will need more convincing.

“The fact of the matter is that the Conservatives had countless opportunities to rethink public and private sector IR35 reform, but ploughed on despite efforts across the industry to encourage them to consider the bigger implications.

“It’s also difficult to overlook the irony. The Shadow Chancellor is Mel Stride, who was one of the driving forces behind the introduction of IR35 reform under the previous government.”

Dave Chaplin, CEO of IR35 tax compliance firm IR35 Shield, said, “The Conservative Party needs to make up its mind on IR35. They introduced the reforms in 2017, extended them to the private sector in 2021, despite backbench calls for a delay – then announced a repeal in 2022 under Kwasi Kwarteng, which was swiftly reversed by Jeremy Hunt. They later fixed a major flaw in April 2024, and now, once again, they’re calling for reform of the very legislation they created, repealed, and reformed.

“When the reforms were first introduced, they contained a significant flaw that placed disproportionate tax risk on firms. This led many large organisations to ban contractors altogether, which was never Parliament’s intention. Although the April 2024 changes helped significantly reduce that risk, many firms still take an overly cautious stance for fear of HMRC penalties.

“These market distortions continue to harm both businesses and contractors. Many compliant contractors are now unable to find work and, as a result, are paying no tax, an outcome completely contrary to the policy’s aims. While the reforms sought to curb tax avoidance, the overreach has been substantial.

“The core problem lies in the poor drafting of the legislation, which failed to clearly define which party should make status determinations in complex contractual chains. This ambiguity has left firms and HMRC case workers struggling to apply the law consistently, undermining its purpose.

“The lack of clarity is eroding confidence and damaging the UK’s flexible workforce. IR35 Shield is calling on the government to commission an Independent Review, led by the Public Accounts Committee, to correct these drafting errors and introduce amendments that make the legislation fair, workable, and effective for all parties involved.”