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The new contractor tax change legislation needs a rewrite

Paystream News

Kerry Hull

Monday 9th May, 2016

From April 6 access to travel and subsistence relief was restricted for contractors working through employment intermediaries. Those subject to the right of "supervision, direction or control" by anyone they worked with would miss out on tax relief.

And in order to determine a contractors SDC status HMRC advised that an SDC test was to be carried out however this was unexpectedly replaced in the legislation with the test for IR35.

HMRC has admitted that they have got the wording wrong in the new legislation and will have to rewrite it, a mistake that drew criticism from the contracting sector with tax experts claiming it highlighted a chaotic and overly complex tax system that was in desperate need of simplification.

Following on from their YES2T&S campaign PRISM have called for a strategic review of the legislation affecting contractors which was tabled as an amendment to the Finance Bill by the SNP and its Treasury spokesman Roger Mullin following meetings with PRISM. The Bill is still working its way through Parliament.

Crawford Temple, CEO of PRISM, said: "There is so much complexity in employment legislation and so many different tests that the people who write our laws cannot even get it right first time. What chance has the ordinary man and woman got who are not tax experts but nurses, engineers, teachers, construction workers and IT experts?"

"This is proof if any were needed that PRISM's proposed strategic review, backed by 55 cross-party Parliamentarians and a Commons intervention by a major opposition party, is long overdue. UK workers are classed officially as either self-employed or employed. The truth is there is a third way of working and contractors are losing patience waiting for government to play catch up."

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