HMRC’s IR35 tool won’t stand up in court
If you’re a contractor, you could suffer from tax hikes and diminishing opportunities thanks to HMRC’s IR35 tool if proposed reforms go ahead next year. HMRC intends to release an online tool to help agencies and hirers determine the IR35 status of contractors.
However, as senior manager of Tax and Business Law at the Association of Chartered Certified Accountants (ACCA) Jason Piper notes, the tool won’t be able to provide certainty as it compromises the nature of IR35: “For an IR35 tool to reach an incontestable judgement, it would have to predict the future. There are too many barriers standing between HMRC achieving its goals with this tool, not least the underlying case law itself.” More...
IR35 reforms could kill of limited company contracting
If you’re a limited company contractor in the public sector, there is a risk that your agency may attempt to force you into using a PAYE umbrella company from next April. Experts are warning that the debt transfer provisions included in the proposed public sector IR35 reforms will mean agencies will avoid engaging with limited company contractors solely for their own purposes.
“HMRC is unfairly using this liability as a tactic to encourage agencies to be risk-averse, effectively creating a situation where there will be false employment,” comments ContractorCalculator CEO Dave Chaplin. For contractors, the outcome could mean reduced means of engagement and take-home pay. More...
Public sector clients contest IR35 reform proposals
Reformation of IR35 in the public sector has been met with further opposition as public sector clients have expressed concern over the impact of the proposals on their ability to attract contractors.
A recent survey from the Recruitment and Employment Confederation (REC) shows that 43% of clients believe the changes will mean fewer contractors will want to engage with them if the proposals go ahead. Meanwhile, 26% claim they will have to decrease their use of contractors as a result. The consultation on the proposals has recently closed, but you still have time to fight the reforms by raising awareness and lobbying your MP. More...
Taxman outlines digital tax strategy for contractors
HMRC’s timetable for implementing its digital tax strategy is “worryingly short”, with contractors and other taxpayers likely to bear the brunt. The is the warning from Frank Haskew, head of the Institute of Chartered Accountants in England and Wales (ICAEW) tax faculty, after HMRC released a series of consultations into its regime.
Contractors only have until 7 November to respond to each consultation, which Haskew stresses will be universally disadvantageous: “We want to work with HMRC to build a digital tax system that small businesses will see value in, rather than being a system that adds to their costs.” More...
Contractors will abandon public sector if IR35 reforms go ahead
More than half of public sector contractors would leave the public sector if damaging IR35 reforms go ahead, a survey by the Association of Independent Professionals and the Self Employed (IPSE) has found.
Whilst 31% of respondents said they would no longer work on public sector contracts altogether if the proposals are introduced, 23% said they would terminate their contract if deemed to be within IR35. “While IPSE fully agrees that all tax payers should pay the right amount, we believe the Government is going about it in completely the wrong way,” adds IPSE CEO Chris Bryce. More...
HMRC accused of targeting ‘cash cow’ contractors with tax regime
HMRC has been accused of using contractors and small businesses as a “cash cow”. This comes after plans for a draconian penalty regime were announced in a consultation as part of its ‘Making Tax Digital’ plans.
Contractors who are late in supplying information could incur a fine of as much as £100 after four offences, with each additional offence resulting in a further fine. HMRC is also proposing to treble fines for the late payment of tax. “This is going to be a cash cow for the taxman,” comments Institute for Chartered Accountants tax policy adviser Anita Monteith. “It’s going to be a nightmare.” More...
Dividend tax changes are anti-business, argues tax expert
A leading tax expert has spoken out against the dividend tax hikes enforced on limited company contractors last April, urging the new Chancellor to re-think the tax ahead of the Autumn Statement, Accountancy Age reports.
Contractors now face a tax charge of between 7.5% and 38.1% on dividend income, which head of tax at Bishop Fleming Andrew Browne says is damaging the UK’s enterprise culture: “Business owners will be asking themselves why they should be taking risks if they are going to be further penalised. This is surely anti-business.” More...
HMRC tax avoidance clampdown shifts focus onto advisers
Advisers who encourage contractors into tax avoidance schemes could soon be subject to financial penalties under fresh Government proposals. A new HMRC consultation looks to shift the onus from contractors to advisers, who could pay a fine of up to 100% of the lost tax if defeated in court by the taxman.
The proposals were welcomed by Freelancer and Contractor Service Association CEO Julia Kermode: “For too long unscrupulous advisers have been getting away with promoting tax avoidance schemes with no repercussions. People put their trust in their advisers to give them sound advice and rely on them to navigate the complexities of the legal tax system.” More...
Contractors continue to help drive record employment figures
The contract sector continues to be one of the driving forces behind ever-rising employment figures in the UK, the latest labour market statistics from the Office for National Statistics (ONS) reveal. The number of self-employed increased by 257,000 to 4.79m in the period from April to June 2016, helping the UK to achieve a record overall employment rate of 74.5%.
Self-employment now equates to 15.1% of all employment. “As we enter a critical juncture for the contract sector, these latest figures emphasise the importance of the self-employed and should provide a stark warning to the Government of the potential consequences of proposed IR35 reforms,” comments ContractorCalculator CEO Dave Chaplin. More...
Contractors winning increasing amount of HMRC challenges
If you’re a contractor contesting a HMRC judgement there’s an increasing likelihood that you’ll win, reports the Telegraph. Recent Government figures found that taxpayers challenging a HMRC ruling come out on top more than half of the time. Taxpayers have been particularly successful appealing penalties, managing to cancel penalties altogether 52% of the time.
Meanwhile, taxpayers also won out in 31% of occasions when appealing the amount of tax being asked for, whilst almost one in five contractors are successful in tribunal cases. Contractors are encouraged to remain vigilante overseeing their tax contributions, in case the taxman’s demands don’t add up. More...