IR35 was introduced in 2000 and is designed to tackle tax avoidance, by establishing whether people who are self-employed should actually be classed as employees for the purposes of paying tax.
HMRC introduced controversial IR35 rules for the public sector in April 2017. Instead of the contractor having responsibility for determining their employment status, the client or hirer now needs to make the call. They would be liable for any missing tax if they got the decision wrong.
HMRC has launched its long-awaited consultation on ‘off-payroll working in the private sector.’ To help get you up to speed, here are seven key points.
1. Extending public sector reform is HMRC’s “lead option”
HMRC says its “lead option” for tackling IR35 non-compliance is extending its controversial public sector reform to the private sector.
HMRC does list two other options it’s considering – a record-keeping regime and a supply chain checks and assurances system. But there isn’t as much detail on how these might work compared to its preferred proposal.
There are other solutions HMRC sees as ‘out of scope’ entirely. These include the Freelancer Limited Company, minimum contract lengths, and clients paying employer NICs.
The wording has led some experts to read between the lines. Employment status specialist David Kirk, speaking to ContractorUK, said: “If this means that the only solution actually is to rollout the public sector reforms to the private sector, I fear for the future. They do really need to be more imaginative.”Continue reading