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IR35 reforms for contractors coming to the private sector

The IR35 tax reforms that are being introduced by HMRC have moved a step closer to being rolled out to firms in the private sector, following the publishing of a second consultation on this last week.

In this latest consultation document, HMRC states that any business that hires contractors outside of its main payroll will have the responsibility of resolving any tax issues that occur, as well as for covering any gaps in tax payments. This news confirms that IR35 makes the company, rather than the individual employed by it, liable for sorting out tax status matters, which will be a major change for companies to take on board.

The IR35 reforms were implemented within the public sector two years ago, but in the face of criticism, the government is holding back on rolling them out to the private sector until April next year. Given the additional burden of responsibility that they will place on private companies, it will make sense for many to seek advice on their tax return from an accountant to make sure that they are complying with them.

A spokesperson for HRMC said of the changes:

“We expect that agencies at the top of the supply chain will assure the compliance of other parties, further down the labour supply chain, if they are ultimately liable for the tax loss to HMRC that arises as a result of non-compliance.”

Around 1.5 million of the smallest firms will not be included in the rollout.

Posted by Peter
March 19, 2019

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