A sense of panic and alarm spread rapidly through the wider contracting community when HMRC sent IR35 letters to more than a thousand GlaxoSmithKline (GSK) freelancers and contractors last week. But this is just a ‘taste of things to come’ when IR35 changes are extended to the private sector in April 2020, according to a contractor interest group.
An overwhelming majority of recruiters expect umbrella company usage to soar in response to IR35 changes coming to the private sector.
A survey from the Association of Professional Staffing Companies (APSCo) found that 91% of professional recruiters thought that more contractors would shun Personal Service Companies (PSCs) in favour of umbrella arrangements due to the new IR35 rules which take effect in April 2020.
Investigations into the contractor employment status could generate close to £30m according to figures released by HMRC.
The data shows that HMRC believes it can generate an extra £27.7m before investigations are concluded. The figure refers to ‘tax under consideration,’ which is an estimate of what HMRC would lose if it didn’t investigate.
If you pay taxes through HMRC’s Self Assessment system, you need to make sure you settle your second payment on account by the end of this month.
A payment on account is an advanced payment towards your tax bill, including income tax and Class 4 National Insurance if you’re self-employed.
An IR35 ruling on a case involving a urologist who worked for two different hospitals could have important consequences for medics operating as locums and NHS off-payroll working rules more generally.
In the tax tribunal case between a locum urologist and HMRC, a judge ruled that one of the contractor’s hospital contracts was inside IR35, while off-payroll working rules did not apply in the other.
HMRC has sent a letter to around 1,500 GlaxoSmithKline contractors accusing them of being ‘disguised employees’ and ordering them to pay more tax under IR35 rules.
As the taxman ramps up the aggressive campaign against contractors, the letter was reportedly sent to contractors in different departments at the multinational pharmaceutical company.
HMRC’s letter says that in the 2018/19 tax year, their “view is that the contract between your PSC and GlaxoSmithKline (GSK) comes under the off-payroll working rules ‘IR35’.”
When private sector organisations are charged with judging a contractor’s IR35 status from April 2020, more limited company contractors are likely to be classified as ‘inside IR35’.
To prevent paying more tax, contractors should take steps now to ensure compliance in the future.
In this blog post, we detail a few of the things you can do to give yourself the best chance of avoiding an inside IR35 judgement.
Boris Johnson has won the tentative support of contractor and freelancer organisations, but experts have urged the new PM to improve the economy and support the self-employed.
The Association of Independent Professionals and the Self-Employed (IPSE) called on the Brexit-supporting leader to keep the economy flexible and competitive in the run up to Britain’s exit from the EU.
In a statement, they called on Mr Johnson to reform the tax system and scrap damaging changes to IR35, reduce the retrospective nature of the loan charge and help stamp out late payments among other policies.
The Treasury has published the , which confirms a number of important details about the upcoming IR35 reforms in the private sector.
Ignoring some of the recent calls for the reforms to be delayed, the bill confirms that off-payroll rules will be extended to the private sector from 6 April 2020.
In line with the changes in the public sector, private sector clients will be responsible for assessing a contractor’s IR35 status. Previously, this responsibility lay with the contractor.
HMRC is under pressure to say when the new improved IR35 ‘Check Employment Status for Tax’ (CEST) tool will be released, as stakeholders point out flaws with the current version.
The tax authority has confirmed that its CEST tool will undergo enhancements before IR35 reforms are extended to the private sector from April 2020.
But so far, little is known about what updates will be applied and when the new tool will be available.