The government has confirmed the roll-out of tax changes to the private sector. The announcement was made in a Treasury report, published last week (Feb 27th).
The confirmation gives private enterprises which may be impacted by the changes a little over a month to prepare. As we have covered in previous reports, recruiters may be liable for unpaid taxes of some of their placements. It is therefore viral that recruitment firms, agencies, and consultants have a full understanding of the new legislation.
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Given the short time-frame now in place, the government has offered several concessions on the tougher line that the new rules originally took.
Among the allowances include:
No retroactive fees
Confirmation that the new rules will not be applied to tax years prior to April 6th 2020.
Phased in penalties
Companies will not face financial penalties for errors relating to off-payroll reporting for the first twelve months of the new regime.
No historical investigations
The government has pledged not to open new investigations that relate to tax liabilities of Personal Service Companies (PSCs) for tax years earlier than 6th April 2020. However, this allowance will not apply to cases of deliberate fraud.
Improved rights for contractors and agencies
Client companies will be legally obliged to provide information regarding their size, when requested by contract workers or staffing agencies.
The government also conceded that the implementation process of private sector IR35 rules has been rather complex. It will seek to address uncertainties by providing support and follow-up research. New, official guidelines and self-help manuals for affected organisations will be published during the first twelve months. Tax authorities will also conduct external investigations into the implementation process, starting October 2020. The research will consider how assessments are being conducted, complications, and ease at which new rules are being adopted.
You can read the full statement from the Treasury Here.