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March 05, 2019
IR35 contractor tax reforms crawl closer to UK private sector with second consultation

HMRC: How about a client-led dispute resolution process?

Organisations hiring off-payroll contractors will be responsible for handling disputes over tax status and ultimately liable for missing tax payments once IR35 reforms hit the private sector, HMRC has said.

In its second consultation on the private sector rollout (PDF), published today, HMRC said it wanted to improve communication through the labour supply chain and acknowledged some concerns about the reforms.

Broadly, IR35 reforms shift responsibility for determining tax status from the employee to the employer. Those caught in the net will be taxed as employees rather than through their personal service companies (PSCs).

The taxman first changed the way off-payroll workers’ tax statuses are decided in the public sector during April 2017. Now it plans to do the same for the private sector, saying that just 10 per cent of PSCs apply existing legislation correctly, with the cost of non-compliance estimated to reach £1.3bn by 2023-24.

UK Tax Authorities About To Make Life Very Difficult For Contractors & Employees

HMRC is going to be putting the burden on employers to enforce compliance to tax code on their employers or in this case “contractors.”

Contractors put in quotes intentionally; as HMRC is clearly questioning whether or not Contractors are legitimately independent

Not only are employers now responsible for the consequence of a contractor being a true contractor or not; but also we anticipate that there are going to be major ramifications with regards to the tax consequences associated with the “tools” that a contractor/employer are bringing to their “employer”

If we assume that the administrative cost and burden and risk for determining true status then the same thing is going to apply to the “tools” and in this case the hardware (smartphone) and associated plan

Tax authorities are increasing the administrative & compliancy burdens due to the desperate need to increase the tax base to pay for the mountains of debt that has been accumulated

It would be wise to implement a solution like mobilityView to separate business from personal in a contractor/gig economy/employee environment

Align your car policy (corporate use of your personal automobile) to your smartphone policy (corporate use of your personal phone & plan)

IR35 contractor tax reforms crawl closer to UK private sector with second consultation