PSC consultation 'due before May IR35 Forum'

The consultation on shifting the tax and IR35 liability of public sector PSCs from worker to engager will launch at the end of April, or in early May at the very latest, ContractorUK has learnt.

Implying this timeline to an accountant, HMRC said stakeholders would be consulted for their views on the proposal before the IR35 Forum’s next meeting, which has been put back to May 10th.

“We received written confirmation from a senior HMRC source which confirmed… [roughly when] the consultation….is [to be] published,” said Brookson, an accountant to contractors.

“It is likely to run over the summer [and] typically [this means] it will then be followed by draft legislation at Autumn Statement 2016, about November-December time.”

Matt Fryer, compliance manager at Brookson, says his assumption is that any changes to public PSC contracting made from April 2017 will replace the existing ‘assurance process.’

“It appears as though the current regime is not seen as robust enough to tackle HMRC’s perceived problem with non-compliance within the public sector,” he said.

“Our initial view is that contractors working in the private sector will not see any changes to the current IR35 regime and can potentially breathe a sigh of relief (for now).”

So to date, it is only the procedures that public bodies follow to ensure their off-payroll staff pay the correct amount of tax that are going to be axed, despite being updated as recently as last year.

Meanwhile, equally complex procedures to gauge if contractors are entitled to tax relief on T&S expenses, due to not being Supervised, Directed or Controlled, will not be spelt out.

Lucy Smith, a spokesperson for All Umbrella Companies Are Equal, which had been expecting HMRC to release guidelines, says formal guidance on SDC is now not going to be unveiled.

“We have received confirmation from HMRC that there will be no further guidance on Supervision, Direction or Control,” she said. “The Revenue is under the impression that we have had all we need to know.”

Smith, who is also the manging director of ContractorUmbrella, hopes the confirmation might relieve “stress and uncertainty that seems never-ending” for umbrellas and their users. She reflected: “Now we can head forward simply as a straightforward PAYE brolly with no ongoing expenses.”

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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