Off-Payroll Working Rules: 11th hour reprieve?

16th January 2020

Those personal service companies working in the private sector (referred to, variously, as freelancers, consultants or contractors) should now be aware that new tax rules will apply to them with effect from 6-Apr-20.  These rules, off-payroll working, aim to finally clamp down on the abuse of the Inland Revenue Press Release number 35 tax rules (IR35) that have been with us since 2000. As these changes will, typically, increase the tax these businesses pay by around £10k pa, they are proving highly controversial. Of particular concern to those affected is that these rules were designed to only increase the tax take from those that are, effectively, ‘disguised employees’. What is happening, however, is that end clients, who now take over the responsibility for making the status assessment, are de-risking their exposure to potentially getting their tax administration wrong, by either, treating all of their limited company labour as being caught by these new rules, or by moving all of this labour over onto an umbrella or similar service provider. So those genuinely running a business on their own account are unfairly also suffering the tax consequences.

 

Perhaps in response to the lobbying of these concerns, the Chancellor has now announced a review, with the conclusions of this review to be published by mid-February.

 

With this review and the 11 March Budget falling so close to the planned implementation date for these new rules, this leaves little time for change. One can only speculate on how tempting it must be for Messrs Johnson and Javid to announce a u-turn or delay on this.

 



 
Other items in Blogs
 
Paul Jefferson
2nd April 2020 Tax Planning for COVID-19 – A Brief Guide

Our Tax Department has written ‘A Brief Guide to Tax Planning for COVID-19’ please click the link below:   Tax planning for COVID-19 Brief Guide  

Read More »

Trina Nunn
2nd April 2020 COVID-19: HMRC Delays MTD ‘Digital links requirement’ until 1 April 2021

In light of the Covid-19 pandemic presenting unprecedented challenges for everyone, HMRC has announced a one year deferment to the requirement to digitally link separate software programmes when preparing your VAT return. The soft landing period of MTD (Making Tax Digital) had originally been in place for businesses to make a manual transfer – this…

Read More »

Harriet Sim
31st March 2020 COVID-19: July POAs

With an increasing pressure on the government to provide financial support to UK taxpayers during the COVID-19 pandemic, amongst other proposals, the government announced a deferral of the due date of the second payment on account for 2019/20.   Initially it was unclear whether this would apply only to self-employed individuals. Clarification has now been…

Read More »

Ian Piper
30th March 2020 Coronavirus Related VAT Deferral: Cancel DD with Bank

It is fairly well publicised now that as part of the Government’s financial support package for businesses during this Coronavirus outbreak, these businesses can, if they wish, defer their next VAT payment(s) (those due between 20 March and 30 June 2020). Interest and penalties will not be charged on such a deferral. What was not…

Read More »

Chris Kelly
27th March 2020 COVID-19: Organising your Business Finances

  Whilst the Government have announced a business finance support package, it is unlikely to be accessible for several days (the loans via the banks) or weeks (the grants via HMRC/Local Authorities). Not all businesses will meet the criteria for them anyway.  There is more to come from the Government, but in the meantime business…

Read More »

Chris Ridgeon
26th March 2020 Help for the Self-Employed

The new Chancellor, Rishi Sunak, has announced this afternoon (26th March 2020) much needed support for the self-employed. This will be known as the Coronavirus Self-Employment Income Support Scheme.   As in any support, there are conditions and the detail will need to be scrutinised.   To be eligible for the scheme there are various…

Read More »