Fears of a change to the IR35 legislation following the announcement of a crackdown in false self employment in George Osborne’s Autumn Statement on Thursday have been allayed.
Speaking to Contractor UK, HM Revenue and Customs say the IR35 legislation will not be changed and the false self employment will actually be applied to Sections 44-47 of ITEPA 2003.
In the Autumn Statement on Wednesday, George Osborne announced there would be a crackdown on self employment which sent shivers to contractor accountants concerned that it was a heavier crackdown on contractors working through their own limited company, however HMRC have explained:
“It is aimed at those who are providing schemes making low paid workers self-employed, where the terms that they are engaged under are those of employment.”
Contractor UK added that it is expected “the consultation will say that, from April 2014, about £400m a year will be netted by strengthening the Agencies legislation (also known as the Agency Worker Rules) to ensure the correct tax and NICs are paid where the worker is employed.”
Rather than finding the worker, HMRC will seek the intermediary making it even more important for those paying contractors that the contractor is not in false self employment and this should be built in to the compliance checks an intermediary would complete when a contractor chooses to use that specific intermediary.
What are your thoughts of this ‘crackdown’ by HMRC? Do you think you will be affected?