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IR35 in the private sector consultation

Julian Ball

Julian Ball | Legal Director

Monday 18th Jun, 2018

Last month the Government announced a consultation to look at the taxation of PSCs in the private sector. The consultation is similar to the one that took place in the public sector which ultimately led to the "off payroll" rules.

There is a perception within Government that the off payroll rules in the public sector have improved compliance and have had no material impact on the public sector; our experience has been very different and there is no doubt that public sector bodies, agencies, software providers and accountants have experienced significant difficulties and costs. This will be fed back to HMRC.

Nevertheless the Government is keen to raise additional tax revenue and is looking at "off payroll" in the private sector as a means to do this.

Although we agree that compliance could be improved within our sector it is important to recognise the improvements that have been made. Providers now have accreditations such as Professional Passport and FCSA and agencies are using PSLs to prevent the use of "dodgy" schemes. In addition HMRC has begun to crack down on offshore schemes and has written to some agencies whose workers use these schemes asking for payment of unpaid taxes.

There is still a long way to go before we can confidently say that bad practice has been stamped out within our sector but we hope that the Government will take time to reflect on the progress made before introducing new legislation in the sector.

This is just a consultation at this point in time so nothing is decided - we will of course keep you posted on any developments here.

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