HMRC starts consultation in private sector to crack down on off-payroll working
£1.2bn lose due to non-compliance of IR35 reckons UK Gov
The UK government in the Autumn Budget 2017 revealed it would consult on how to tackle non-compliance with the off-payroll working rules in the private sector and has opened a consultation on proposals to extend IR35 off-payroll working in the private sector. HMRC understand the cost of non-compliance in the private sector is projected to increase from £700m in 2017/18 to £1.2bn in 2022/23.
It is estimated that one-third are working like employees whilst two-thirds of people working through a company are genuinely self-employed, however, implementation of IR 35 could affect 2 million contractors.
Individual contractors are responsible for the compliance with the IR35 legislation whilst working with public body or recruitment agency, this move has raised £185m for 2017/18 by bringing public sector contractors within the scope of the legislation.
This move has not be appreciated by the IT contractors in the public sector, however, HMRC with all intents and purposes is keen to extend the controversial public sector reforms onto the private sector.
"The government has made no decisions about how to proceed and wants to consider the evidence of how the public sector reform has gone, as well as the impact on businesses and individuals who would have to implement any change," it said.
However, HMRC said it also believes "that the available evidence shows that the public sector reform has been effective in tackling noncompliance with the off-payroll working rules".