{"id":1331,"date":"2020-02-17T16:34:12","date_gmt":"2020-02-17T16:34:12","guid":{"rendered":"https:\/\/www.aysgarthaccountants.co.uk\/?p=1331"},"modified":"2022-03-24T16:19:33","modified_gmt":"2022-03-24T16:19:33","slug":"the-off-payroll-tax-rules","status":"publish","type":"post","link":"https:\/\/www.aysgarthaccountants.co.uk\/the-off-payroll-tax-rules\/","title":{"rendered":"The Off-payroll Tax Rules"},"content":{"rendered":"\n
IR35 AN INTRODUCTION<\/p>\n\n\n\n
STOP PRESS!! As part of the\u00a0coronavirus measures\u00a0these off-payroll rules are being delayed a year until April 2021!<\/strong><\/p>\n\n\n\n The Problem<\/strong> One of the classic examples of this was John Birt<\/a>, who when he was appointed the Director-General of the BBC was not an employee but had his own company. <\/p>\n\n\n\n This was clearly wrong but that does not mean that every single limited company, every single\u00a0personal services company\u00a0(or\u00a0PSC), is a disguised employee and HM Revenue and Customs (HMRC) still cannot realise this despite constantly losing most of the tax cases they take to the tax tribunals.<\/p>\n\n\n\n The \u201csolution\u201d<\/strong> However what is changing is the responsibility. In April 2017 the public sector became responsible for deciding whether the bottom contractor was in or outside of IR35. From April 2020 a medium or large private sector company will have to make that decision. HMRC are relying on the large or medium-sized companies being so risk adverse that they will move all their freelancers into paid employment.<\/p>\n\n\n\n Top client<\/strong> From the above you can see why many large companies are planning to stop using contractors. The rules where the Top Client is a\u00a0Small Company\u00a0are not changing.<\/p>\n\n\n\n Bottom contractor<\/strong> Conclusion<\/strong> A quick health warning<\/strong> IR35 AN INTRODUCTION STOP PRESS!! As part of the\u00a0coronavirus measures\u00a0these off-payroll rules are being delayed a year until April 2021! The ProblemThe Off-payroll rules, or IR35 as they are more commonly known, tries to address a perceived tax avoidance issue. Governments have passed tax rules that allow companies and receivers of dividends to be taxed […]<\/p>\n","protected":false},"author":3,"featured_media":1333,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[45,63,67,68],"tags":[47,48,55,54,50,49],"acf":[],"yoast_head":"\n
The Off-payroll rules, or IR35 as they are more commonly known, tries to address a perceived tax avoidance issue. Governments have passed tax rules that allow companies and receivers of dividends to be taxed at lower rates than employees are taxed under Pay As You Earn (PAYE). If a company uses the services of another company then it also avoids employee protection rights, holiday pay, pension contributions. There is therefore understandable pressure for individuals to set-up a company and make themselves appear to be in business when they are really an employee.<\/p>\n\n\n\n
From 6 April 2020 the rules are changing. In many ways nothing is changing: if a contractor was outside the scope of IR35 in the past then they will still be outside the scope of the Off-payroll rules.<\/p>\n\n\n\n
From the top client\u2019s point of view this then becomes a bureaucratic nightmare. Every department across a large organisation needs to know the rules. Under the new rules:<\/p>\n\n\n\n
Many freelancers are being pushed into employment or using an umbrella company. This means that while nothing has changed and the contractor may be convinced that are clearly outside the off-payroll rules; the top client, using an ill-informed individual to make the SDS, may make the wrong decision. While you have the right of appeal many contractors are saying they will simply walk out. This will be seriously bad news for the British economy.<\/p>\n\n\n\n
This page is an introduction to the topic of IR35. Over the next few weeks please check back as more blogs linked to this one will be appearing. But in the meantime if you need some professional advice then please\u00a0contact us<\/a>.<\/p>\n\n\n\n
This blog and the links from it, are as Aysgarth Chartered Accountants understands the off-payroll rules on the date this is published. Subsequent legislative changes may, and will probably, be introduced. This blog is just an introduction to a complicated and changing piece of legislation and you should take your own legal and tax advice.<\/p>\n","protected":false},"excerpt":{"rendered":"