The countdown is on for changes to ‘off-payroll’ working rules to be extended into the private sector – a move that could have significant impact on some businesses and sole traders.
The IR35 – also known as ‘off-payroll’ – rules allow HMRC to tax sole traders as employees if it deems their working arrangement are akin to regular staff.
In April 2017, responsibility for deciding whether IR35 should apply to self-employed workers shifted from contractor to employer in the public sector.
From April next year the same change is set to take effect in the private sector, following the publishing of the government’s draft Finance Bill.
However, that has sparked concern in some quarters, with the Blackpool-headquartered Federation of Small Businesses (FSB) among those urging delay.
It has warned that the changes, following a period of sustained political uncertainty and stuttering economic growth “risks significant disruption” to a quarter of a million sole traders.
To highlight the uncertainty it points to the fact the Small Business Index confidence measure was in negative territory for an unprecedented fourth straight quarter in the three months to June this year.
FSB National Chairman Mike Cherry says: “Pressing ahead with IR35 changes in April with no regard for the other pressures facing businesses is a reckless move.”
He adds: “Left unamended, this bill could easily usher in an environment where firms in need of expertise in the short-term steer clear of the self-employed community because they’re afraid of making an incorrect assessment, which would be damaging for all concerned.
“A lot of smaller firms that rely on sole traders have no experience of navigating IR35.”
To discuss if the rule change will have an impact on you please contact me on me on 01772 430000.