Onshore Employment Intermediaries

Since the ‘onshore employment intermediaries: false self-employment’ report was instigated, contractors have been anxiously waiting to learn whether or not the rules will affect them.

Although Limited Company contractors continue to be outside the scope of the legislation, HM Revenue & Customs have reserved the right to reclassify dividend income as employment income if they had reason to believe a contractor’s career was formed purely for tax purposes.

In its publication of its ‘summary of responses’ report, it appears that many concerns regarding the test for providing the absence of control have been ignored by HMRC.

Instead of addressing the concerns proactively, the customs have decided only to provide more guidance on the issue. This guidance is meant to simply provide scenarios which illustrate where control, direction and supervision is present, and then where it is not.

The response also gives an option for those confused to talk to HMRC’s compliance officers, as they “Will also help customers to make considered decisions in relation to the new legislation.”

The new scheme will be introduced with an aim to prevent mass incorporation from self-employment to avoid the legislation.

Despite more than half of the respondents calling for a delay, the government has made the decision to go ahead regardless, asserting that the legislation will take effect as of 6th April of this year.

They have justified the hasty implementation by stating that if they delayed the process, a window could be created for those trying to circumvent the legislative intention, “In which for them to devise new avoidance arrangements.”

The customs have also assured that the new legislation will not conflict existing IR35 rules. They believe that contractors already ‘caught’ by IR35 will not be in-scope of the false self-employment rulings, as they are already paying income tax and National Insurance Contributions (NICs) on their earnings.

As more and more is being filtered through about the issue, it is easy to become inundated and confused by the legislation’s regulations and surrounding information.

Qdos Contractor can help clarify the situation. Our experienced consultancy team pride themselves on being conversant, and are therefore have a good knowledge of the legislation and what contractors can expect.

Call 0116 269 0999 to speak to one of the team today. 

By:Sam Greenwell

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