The History of IR35: a Timeline

IR35: A History

1999 – Conception of IR35

The infamous press release from Inland Revenue, which was numbered ‘IR35’ is issued.

2000 – Implementation of IR35

The new tax year (6th April) introduces the IR35 legislation as law.

2001 – Opposition to IR35 

The trade body PCG (now known as IPSE) is formed with the aim of abolishing the rules.

2002 – Movement against IR35

Anti-IR35 groups snowball thanks to the internet, social platforms and online media coverage. 2002 also saw the first IR35 case ‘Lime IT vs Justin’ won by a contractor.

2007 – MSC legislation introduced

This was to stop contractors with no connection to a business being paid as a shareholder to avoid IR35 rules.

2010 – OTS formed

The Office of Tax Simplification (OTS) is formed in May 2010 almost entirely dedicated to improving IR35.

2011 – IR35 Forum established

This was to reduce confusion around the legislation. HMRC published its new ‘Business Entity Tests’ (BETs) in May of the same year.

2012 – Criticism of BETs

BETs are widely criticised as most genuine contractors fell into the ‘medium’ or ‘high’ risk category.

2013 – ‘Office holders’ made inside IR35

The Finance Bill 2013 states individuals who ‘hold office’ in client companies should be classed as inside IR35.

2015 – BETs scrapped

HMRC scraps ‘flawed’ BETs, after lobbying from IR35 experts.

2016 – IR35 consultation

A consultation into IR35 reform in the public sector opens. In addition, changes to Travel and Subsistence rules result in ‘inside IR35’ contractors being unable to claim these expenses.

2017 – Public sector changes enforced

HMRC releases Check Employment Status for Tax tool (CEST) in March 2017. On April 6th, public sector reform is enforced and in November, a consultation into private sector changes is held.

2018 – Private sector reform announced

The October 2018 Budget announces that medium and large private sector businesses will become responsible for setting IR35 status, and that fee-payer responsibilities will be introduced.

2019 – Opposition to changes grows

Response to the private sector consultation is published at the same time as the draft legislation for changes, in the 2020 Finance Bill.

2020 – IR35 reform arrives

Private sector changes will be enforced on 6th April 2020.