Vale & West Chartered Accountants Blog

IR35 to go ahead

The Treasury has announced that the off-payroll tax will go ahead in April this year despite conducting a review this month to address any concerns from businesses and affected individuals about how they will be implemented.

The review will determine if any further steps can be taken to ensure the smooth and successful implementation of the reforms, which are due to come into force in April 2020. As part of this, the review will also assess whether any additional support is needed to ensure that the self-employed, who are not in scope of the rules, are not impacted.

Off-payroll working rules, known as IR35, were introduced in 2000 to ensure that someone working like an employee, but through a company, pays similar taxes to other employees. Employers using contractors who are covered by IR35 are required to deduct income tax and national insurance from their pay as if they were an employee.

Under the reforms, which have been in place in the public sector since 2017,the responsibility of deducing whether contractors are covered by the rules moves from the individual contractor to the employing organisation.

Critics have called for it to be delayed or cancelled altogether, saying they are concerned about potentially missing out on skilled contractors and temporary professionals if they are forced to make tax deductions on their earnings.

There has also been criticism of the reliability of the tests employers must use to determine whether a contractor is caught by IR35, specifically about the Government’s ‘Check Employment Status for Tax’ toolkit.

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