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Self-employed contractors have been 鈥渢hrown under the bus鈥� by the government, a tax compliance boss has said after the chancellor pulled the plug on plans to ditch controversial off-payroll working rules.

The scrapping of IR35 reforms was announced last month by then-chancellor Kwasi Kwarteng as part of an ill-fated growth plan which sent currency and bond markets into chaos and ultimately saw him lose his job.

IR35 reforms were intended to clamp down on tax evasion but have been unpopular in the freelance-reliant construction sector and have seen repeated setbacks and complaints directed at HMRC鈥檚 compliance assessment tools.

The repeal, which had been due to take force from 6 April 2023, two years after the policy was introduced in the private sector, would once again have made freelance workers responsible for determining their own employment status and for paying the appropriate amount of tax and national insurance contributions.

But this morning, Jeremy Hunt, appointed as chancellor on Friday last week, revealed that the reforms were here to stay in a statement which reversed almost the entirety of the Kwarteng mini budget in a bid to instil confidence in the UK鈥檚 public finances.

According to the new chancellor, cancelling the reforms to IR35 would have cost 拢2bn per year by 2026/27, the government鈥檚 target for getting debt to fall as a percentage of GDP.

Dave Chaplin, chief executive of tax compliance firm IR35 Shield, said the government鈥檚 initial commitment to repeal the rules was 鈥渟ensible鈥� and would have 鈥渞eturned an essential level of certainty to contract transactions in the market economy鈥�, resulting in economic growth.

鈥淚nstead, off-payroll will continue to cause significant harm to the self-employed, major businesses, the government and the economy,鈥� he said.

鈥淲hilst we agree that tax avoidance measures are sensible, the off-payroll rules over-extended, causing genuinely self-employed contractors to lose their rights to being their own boss.

鈥淭he Conservatives U-turn on the repeal has thrown around half of the genuinely self-employed contractors under the bus, and likely kissed goodbye to their success at the next general election.鈥�

Chaplin added that in reversing their position, the government had joined the 鈥渁nti-growth coalition鈥� 鈥� the moniker given by Truss to the number of think tanks, media organisations, politicians and activist groups who opposed the Kwarteng growth plan.

Crawford Temple, chief executive of compliance firm Professional Passport, said the off-payroll rules were 鈥渋ll-thought-through and damaging鈥� and called for 鈥渁 considered approach and a proper review that Liz Truss promised as part of her ministerial campaign鈥�.

Brendan Sharkey, head of construction and real estate at MHA, said scrapping IR35 would have 鈥渞educed red tape and helped with concerns over engagement of labour when it is in especially short supply鈥� in construction.

He said that the repeal would have 鈥渉elped to drive recruitment at exactly the right time鈥�, with freelancers who supposedly left the industry when the rules were introduced to the private sector in April 2021 looking to work in response to cost-of-living increases.

And Russell Upton, director of key accounts at umbrella payroll firm Parasol, said: 鈥淎fter a lot of confusion for contractors over the past few weeks, it seems we finally have some clarity on how agencies and end clients should deal with IR35.

鈥淭oday鈥檚 announcement was somewhat inevitable, especially as the original mini-budget did not come with a fully-costed plan and was not put in front of the OBR.

鈥淭his means IR35 reform and practice will stay the same as before the mini-budget, with contractors continuing to receive a SDS from the end client, who will retain the responsibility of determining whether the assignment is inside or outside of IR35.鈥�