Revenue presses ahead with controversial IR35 changes

Grant Prior 4 years ago
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HM Revenue & Customs warned construction companies this week to prepare for controversial changes to the IR35 rules.

The revenue sent letters out to the industry confirming that the changes will go-ahead from next April.

Industry experts said the move will “go down like a lead balloon” with companies and contractors fighting for survival during the Covid crisis.

Current rules allow workers to be employed via a personal service company (PSC) which determines whether IR35 tax rules should apply.

That responsibility will shift from next April to contractors who will determine employment status.

Freelance workers fear losing out through higher tax payments while contractors would also face bigger bills from direct employment.

The changes were due to come into force in April 2020 but were pushed-back due to the coronavirus outbreak.

Construction had hoped the new rules would be delayed again but those hopes were dashed by HMRC this week.

HMRC said: “We recognise that businesses are facing difficult challenges due to Covid-19. HMRC is providing information and support now to ensure businesses have plenty of time to prepare for the changes coming into effect in April 2021.”

Ian Anfield, managing director of payroll specialist Hudson Contract, said: “This announcement will go down like a lead balloon with companies and freelancers fighting for survival in a difficult trading environment with the constant imposition of new lockdown restrictions.

“In the best of times, businesses and freelancers found the HMRC guidance on IR35 difficult to follow, causing confusion and concern over liabilities.

“The latest set of guidance runs over hundreds of pages and invites companies to attend online seminars which HMRC plans to run between now and April next year.

“The confusion has created a vacuum for bad advice with so-called HR specialists and umbrella organisations offering services which could lead to incorrect and potentially damaging determinations for companies and freelancers alike.

“Freelancers could find themselves in the worst of all possible worlds, paying employer and employee taxes but without any of the benefits of actually being employed and their clients would face losing access to a valuable resource if they refuse the terms.”

 

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