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There is concern that when the onus for IR35 compliance and determination is made the responsibility of the client, there is insufficient support from HMRC to determine the distinction between employment and self employment. The CIOT felt that more should be done to clarify this grey area.
The tax body also felt that there needed to be more support from the Government is help with the knock-on effect of these measures on individuals, particuarly where they may be forced or 'encouraged' by clients or engagers into other arrangements.
The Institute has set out its verdict on the main Budget measures, including the IR35 rules in response to a request from the House of Commons Treasury Committee. Its response on the off-payroll working was as follows:
Off-payroll working in the private sector
It was perhaps inevitable that the off-payroll rules would be extended to the private sector, given the inequity and loss to the Exchequer in the growth of off-payroll arrangements. It is welcome that implementation will not take place until April 2020, to allow businesses time to prepare for the changes and for HMRC to work with stakeholders to improve operation of the existing public sector rules. We also welcome the fact that the rules will only apply to large and medium-sized engagers, as they can be complex and administratively burdensome to apply.
The dividing line between employment and self-employment can be unclear. Extending the rules to the private sector places greater onus on HMRC to help both the engagers and those who are engaged identify where that dividing line sits, and provide guidance on the implications for both parties. It would have been preferable if the Chancellor had initiated public consultation on clarifying this dividing line, as its uncertainty is both a problem for those who try to comply and a temptation to the unscrupulous.
There will also be complexities for individuals who cease operating through a company or are ‘encouraged’ into a different arrangement by their engager. HMRC, and other parts of Government, will need to be aware of these potential issues and provide support to help those individuals get their taxes right.
For more Budget news, see Shout99's Political News section.
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Susie Hughes © Shout99 2018
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