HMRC bags £400m+ from public sector off-payroll working rules

The country’s coffers have been boosted to the tune of £410m in income tax and National Insurance Contributions as a result of off-payroll working rules in the public sector.

The estimate was revealed in HMRC’s Annual Report for 2017 to 2018, which was released yesterday.

The changes are certainly having an effect if findings from UK-based accountancy firm SJD Accountancy is anything to go by. Research, also released yesterday, reveals 86% of contractors said the changes had affected them.

Some of the responses from those who had felt an impact include:

  • “Agencies have a tendency to advertise all roles as inside IR35 whether they are or not. I have had to walk away from some well-suited contract offers due to the rigid stance of some agencies”
  • “Created a glut of contractors in the private sector”
  • “Have changed to become permanent after 10 years of being a contractor”
  • “Decided to leave a public sector contract because the client decided to reinterpret the IR35 status of the contract mid-term”

The off-payroll rules, introduced last April, initially made public sector end-clients responsible for determining whether a worker who operates through a personal service company or other intermediary is caught by IR35 or is genuinely self-employed. Where the worker is caught by IR35, the rules also makes the fee payer, who will often be a recruitment agency, responsible for deducting and then paying the worker’s tax, NI and employer’s NI.

Government is currently consulting on extending the rules to the private sector. The consultation closes on 10 August 2018.

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