In essence, HMRC are planning to make changes to the UK tax rules in the private sector, specifically for off-payroll working (self-employed contractors), in the hope of minimising tax avoidance from ‘disguised employees’ working as independent contractors.
Currently, in the private sector, contractors determine their own IR35 status via their accountants or through independent worker status tests, however, the planned changes (which could be implemented as early as April 2019) will ultimately shift the liability to determine IR35 status from the contractors to the end user.
Fundamentally, end users will be liable for any penalties or unpaid tax of their contractors if HMRC find that they have falsely labelled their contractors as outside of IR35, which sparks the fear that end users (to avoid risk) will gradually stop using contractors in the private sector.
On Monday, 29th October, we'll know for sure if and when the Treasury will extend IR35 reforms from the public sector into the private sector.
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