In recent years contracting has become one of the most complex areas of taxation particularly now as HMRC introduces further the Existing off-Payroll Working Rules (also know as IR35).
The New IR35 changes will be implemented in April 2020 for private sector contractors that will transfer responsibility from contractors to large and medium companies to assess IR35. The 2020 reform will bring private sector IR35 in line with the public sector, where the reform was implemented in 2017
from April 2020 (also known as IR35) will see further reforms introduced as medium and large organisations in all sectors of the economy will become responsible for assessing the employment status of individuals who work for them through their own limited company.
The principle is to ensure that contractors pay the same Tax and National Insurance contributions as an equivalent employee.
HMRC has already developed the Check Employment Status for Tax (CEST) service to help organisations determine whether the off-payroll working rules apply. HMRC is working with stakeholders to enhance CEST and develop new guidance before the reform comes into effect.
As a contractor you will most likely be operating though a Personal Service Company (PSC) to which IR35 relates. The new regulations transfers the responsibility of the determination of ‘inside’ or ‘outside’ of IR35 to whomever pays the PSC, previously it was the PSC legal requirement.
Shires Accountants has been providing expert accountancy, taxation and IR35 testing services to contractors and businesses that use contractors for over 10 years.
If you are a contractor we can advise you on tax efficient ways of working, operate your payroll and VAT and conclude your limited company year accounts and tax return. If you are a business that uses contractors we can assist with IR35 compliance