No changes to IR35 now until April 2017 at the earliest……..??
We are still waiting for the government (HMRC IR35 Forum which met on 15 December 2015) to officially publish its consultation document on proposed changes to IR35 shortly in the New Year. However, early indicators from the current round of consultation process (which closes on 3 February 2016) show that HMRC may now NOT make any changes to IR35 in tax year 2016/2017 and may in fact delay bringing in any changes in until April 2017 at the earliest.
In our December 2015 blog on Umbrella Contractors/IR35 we highlighted possible changes to IR35 which were expected to have been introduced in April 2016 i.e.;
- Tax relief – Individuals working through employment intermediaries (umbrella providers) would not be allowed to claim tax relief on their travel & subsistence expenses, where the worker is under supervision, direction or control (SDC) in the manner in which they carry out the work. Individuals who work through a personal service company will not be allowed to claim tax relief on their T&S expenses where the intermediaries legislation (IR35) applies, and they are not deemed as genuinely self-employed.
Changes to IR35 Most Likely Now Delayed to April 2017 !
It would appear that HMRC (IR35 Forum) may have taken on board the criticisms levelled at some of their suggestions contained in their July 2015 discussion document, such as using the supervision, direction or control (SDC) test as the sole indicator of whether or not IR35 applies and getting engagers more involved in the IR35 process.
The February 2016 IR35 Forum consultation document will set out HMRC’s thinking on IR35 legislation, including whether liability will be transferred to recruitment firms and / or contractors’ end clients or remain with contractors and should also provide clarity on whether Supervision, Direction or Control (SDC) will become the key IR35 test as it will soon be for travel and subsistence (T&S).
We will keep you updated on the outcome of the IR35 February 2016 Consultation !
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Sources:
http://www.contractorcalculator.co.uk/contracting_experts_predictions_year_510910_news.aspx
http://www.contractorweekly.com/contractor-news/tax-a-ir35-news/1279-ir35-still-the-great-unknown
http://www.contractoruk.com/news/0012363personal_service_company_contracting_2016_outlook.html