HMRC considers extension of IR35 rules to private sector

After much deliberation, HM Revenue & Customs (HMRC) has finally shone a light on the future of IR35 tax legislation in the private sector.
The new measures will “make sure that people who effectively work as employees pay the right amount of tax”.
This includes looking at how to increase compliance with the existing “off-payroll” working rules, known as IR35.
Similar rules came into force in the public sector in April last year, affecting public authorities who hire off-payroll contractors. This had a major effect on organisations such as the BBC, which had been paying many of its on-screen stars via Personal Service Companies (PSCs). Both the staff and BBC were asked to repay any tax due.
Recent evidence suggests that workers that only 10 per cent of individuals working in this way apply the rules properly, which could be costing the public purse £1.2 billion a year by 2023 as a result of people paying the incorrect amount of tax.
Financial Secretary to the Treasury, Mel Stride, said: “It’s very important that we recognise the hard work of contractors across all sectors, who contribute to our growing economy.
“But it’s also right that we have a fair tax system that balances efficiency and simplicity for taxpayers, while also supporting our vital public services.
“That’s why we’re consulting carefully and welcome a wide range of opinions and evidence on how to tackle non-compliance.”
A consultation on the new rules, available here, closed on 10 August 2018.
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