IR35 and working for the public sector
HMRC has consistently not been able to collect the IR35 tax liabilities it believes are due.
Just as a reminder, the IR35 regime requires the operation of PAYE on income a company (or partnership) receives for providing services to a third party under terms such that the service provided would count as employment if provided directly.
Currently the IR35 company has to decide whether or not IR35 applies and HMRC has the right to challenge. However, from April 2017 things are changing; for government bodies including a wide range of organisations such as schools, local authorities, hospitals etc. the decision and payment responsibility falls on them. The body must decide if IR35 applies and if so has to operate PAYE and account for employer’s NIC. Any misjudgement will be their responsibility which, in reality, means PAYE is more likely to be applied than not. This could have a significant impact.
Please contact Cathy Corns if you would like to arrange a no obligation meeting to discuss matters in connection with any corporate or business tax issues.
Date: 23rd February, 2017
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