After months of whispers and hearsay about when the IR35 consultation will be launched, we now have confirmation. The consultation aims to "make sure that people who effectively work as employees pay the right amount of tax" and has a closing date of 10th August 2018.
The consultation has stated that it will look at 'off-payroll' working in the private sector. In addition it is concerned with "improving the rules around 'off-payroll' working so contractors who work through their own company pay the right tax". Unsurprisingly the text and spiel from the much maligned public sector roll out of IR35 reform once again rears its head.
One of the most concerning statements in the announcement is where HRMC state that; "evidence suggests that the taxpayer could be missing up to £1.2bn a year by 2023 as a result of people getting the rules wrong, and incorrectly paying tax as if they were self-employed. The consultation will look at how to make these rules work better. The genuinely self-employed will not be affected.".
But the lob sided article introducing the consultation continues to astound by adding:
"Financial Secretary to the Treasury, Mel Stride, said:
- It’s very important that we recognise the hard work of contractors across all sectors, who contribute to our growing economy.
- But it’s also right that we have a fair tax system that balances efficiency and simplicity for taxpayers, while also supporting our vital public services.
- That’s why we’re consulting carefully and welcome a wide range of opinions and evidence on how to tackle non-compliance".
Ensuring compliance is something we have no problem with at all. In fact we fully support it, as all decisions should be underpinned by sound facts. Everything Mel Stride states is of sound logic. However, HMRC goes on to do itself little favour when stating:
"Evidence suggests that the taxpayer could be missing up to £1.2bn a year by 2023 as a result of people getting the rules wrong, and incorrectly paying tax as if they were self-employed. The consultation will look at how to make these rules work better. The genuinely self-employed will not be affected".
In light of the crushing defeat HMRC suffered recently in the Jensal Software case, the timing is more than ironic. HMRC is increasingly tripping over itself at an alarming rate. How much longer this can continue before it comes to a juddering halt is anyone's guess.