Are you a contractor working in the public sector? Are you aware of the new IR35 changes introduced in the Spring Budget? If not, then it might be in your interest to look at the latest advice issued by the Association of Independent Professionals and the Self-Employed (IPSE) and check your tax returns.
So why is the IPSE advising contractors working in the public sector to check their IR35 returns? Well, it claims confusion has arisen following the public sector rule changes introduced in the Spring Budget, 2017. As a result of these changes, public sector organisations are the ones who must now determine the IR35 status of each of its contractors; rather than the individual contractors themselves.
Why does the IPSE believe these changes might be problematical? Well, the concern is that if a public sector organisation deems a contractor to be inside IR35 they must apply tax to the individual in the same way as they would a full-time employee. The potential problem is that contractors may inadvertently be placed in the wrong tax bracket and be paying more tax than is necessary. Several reports have already come to light showing some public sector workers like locum doctors have already fallen foul of the new changes and have been paying more tax than they should.
The IPSE believes many public sector bodies have taken a blanket approach to the budget changes and are deeming too many contractors to be inside IR35. It is therefore encouraging public sector contractors to make use of the new government IR35 status tool to check whether they are being taxed appropriately. This Employment Status Service tool, unveiled by HM Revenues & Customs in March this year, should, according to the IPSE, provide complete clarity around an individual’s IR35 status.
Speaking about the issue, Chris Bryce, CEO of the Association of Independent Professionals and the Self-Employed, said:
“If public sector organisations were given sufficient time to prepare and followed the guidance laid out by HMRC’s ESS tool, the widespread confusion and uncertainty could, and would, have been eased.”
“We urge all contractors in the public sector to complete the test and take the results to their client.”
“This is the only way contractors can get fairness and clarity. HMRC has said it will stand by the results of their ESS tool and IPSE intends to hold them to this.”
If you would like further clarification on the IR35 budget changes or need help or advice on any other tax issue, then contact Steven Glicher accountants on 0161 485 8007 or email firstname.lastname@example.org.