IR35 Latest News
Paragraph 2.103 of the December 2012 Autumn Statement revealed that the government “has decided not to proceed with the proposal to tax those who meet the definition of a controlling person at source”.
The surprise announcement was, said the Chancellor, is a result of HMRC’s new approach to policing IR35, along with the measures introduced in the public sector this year, which the government thinks are sufficient to prevent the loss through disguised employment.
The news will be welcome to many businesses, after complaints earlier this year that the knee-jerk response to bad publicity around senior civil servants being paid through personal services companies was a step too far that would further complicate the poorly drafted and ineffective IR35 tax measure.
But for those who still yearn for an end to IR35, the statement said the government will strengthen the existing legislation to “put beyond doubt that it applies to office holders for tax purposes”.
So there is more news to come, but no details have been provided of when these can be expected.
Overview of IR35
Many professionals provide their services as consultants, either on a series of short-term contracts or even on a series of repeat contracts for one client. We have the typically confusing situation in the UK where under EEC law, your client will only want to use your services if you operate through a limited company, but the government through HMRC will want to tax your business as though it were a PAYE employee.
Welcome to the world of IR35.
A large number of our clients are in this situation and our accountants are specifically trained, and sustain their training, to cope with the continual developments in IR35.
For further information please explore the subject headings on the right and take a look at our report on Becoming a Contractor.