Osborne has promised to give £800million extra funding to tackling tax evasion with the aim to generate 10 times the investment in tax collected, with HMRC generating savings of 18% from its own efficiencies.
The government also intend “to build one of the most digitally advanced tax administrations in the world. So that every individual and every small business will have their own digital tax account by the end of the decade, in order to manage their tax online”.
One thing which was previously mentioned in the Summer Budget 2015 is the government’s plans “to restrict tax relief for travel and subsistence expenses for workers engaged through an employment intermediary.” The restriction will be placed on “individuals working through personal service companies where the intermediaries’ legislation applies”. This has now been confirmed in the Autumn Statement, meaning that as of 6 April 2016, contractors operating via their own limited company working inside IR35, will not be able to claim expenses in respect of travel and subsistence.
It is expected that if a contractor is caught by IR35 via an enquiry, HMRC would also reclassify any travel and subsistence retrospectively claimed back to the inception of the new rules.
Draft legislation will be published in respect of this on 9th December 2015. Once that has been released Qdos will look to incorporate any relevant changes into reviews and insurance policies where possible.
There was very little said around self-employment and the Statement has left all very unclear on the proposed changes to IR35, which were put forward in the Summer Budget earlier this year. The government is still reviewing responses to the discussion document which was published in July, so we expect a formal consultation process in the not-too-distant future which will provide some clarification. We believe this is a good sign, as it means they are taking the time to properly review the best approach for all stakeholders.
The discussion document on travel and subsistence previously referenced ‘supervision, direction and control’ as the basis for determining a contractor’s eligibility for expenses. In the Autumn Statement, however, it states it is now based purely on the intermediaries’ legislation (IR35) for PSCs. This could infer that HMRC intend to focus on supervision, direction and control with any future changes to IR35 itself.
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