Changes to the IR35 employment tax rules introduced in April 2021 will be repealed from April 2023, shifting responsibility for compliance back to individuals rather than their employers, the UK chancellor has announced.
While the initial reaction from business is “likely to be positive”, tax expert Penny Simmons of Pinsent Masons said there will also be “huge frustration regarding the immense amount of time and money that businesses have spent on ensuring compliance with the rules”.
“Businesses have had to completely change the way that they engage with off-payroll workers, which has been costly and time-consuming,” she said. “But repealing the rules doesn’t mean that that’s the end of the story – businesses will now have to spend time and money once again reviewing their arrangements for engaging off-payroll workers and their agreements with both contractors and labour supply agencies. So, ripping up the rule book won’t necessarily translate into reduced compliance costs in the short term.”
The IR35 rules require that employment taxes be paid by people who provide services to a business through a personal service company (PSC) or other intermediary if that person would otherwise have been regarded as an employee for tax purposes of the engaging business.
From 6 April 2021 engaging private sector businesses, rather than the engaged individuals, became liable for determining whether the IR35 rules apply, operating PAYE and paying employers' National Insurance contributions...
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