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Changes to HMRC’s Off-Payroll Plans ‘Little Comfort to Worried Contractors’

Written by: Keith Tully

Published: 7th February 2020

Business people with a writing paymentChanges to HMRC’s plans for off-payroll tax rules will be of “little comfort” to the many contractors and self-employed people who are still set to be impacted by them.

That’s according to the Association of Independent Professionals and the Self-Employed (IPSE), which has said that some of its members are already being laid off by companies who are rethinking how they work with contractors in advance of the new off-payroll rules being introduced.

For some time HMRC has been planning to adjust its IR35 rules as of April 2020, with the stated aim being to bring self-employed tax dynamics into line with those of PAYE, especially where individuals only work for one company but aren’t officially on their payrolls.

However, concerns have been raised that the effect of the incoming legislation will be to make life much more difficult for self-employed people in ways that aren’t intended and could lead to significant numbers of people suddenly losing vital sources of income.

HMRC is currently conducting a review looking at how the rule changes will work in practice and has now announced that the IR35 legislation will only apply to services provided on or after April 6th rather than payments made after that date.

The government has said that the adjustments to its policy are designed to give companies more of an opportunity to prepare for the rule changes in response to consultations with businesses who’ve said they want greater clarity on “what payments the rules apply to and when”.

A statement given by the Treasury on the subject said: “The government has listened and taken action early to give businesses certainty and more time to prepare to ensure the smooth and successful implementation of the reforms that come into force in April.”

Andy Chamberlain from IPSE said in response: “As we approach the April deadline, HMRC are starting to realise just how difficult these rules will be for businesses to implement.

“Delaying the start date to when the work is actually performed, rather than paid for, is a sensible move, but it doesn’t address the fatal flaws in the legislation itself.

“This minor amendment will be little comfort, therefore, to the many contractors already being laid off by companies who are panicking about the approaching changes.”

Keith Tully

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Keith Tully
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Keith has been involved in Business Rescue since 1992, during which time he’s worked for both independent and national firms. His specialties include company restructuring matters and negotiating with HMRC on his clients behalf.

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