HM Revenue and Customs (HMRC) has launched a consultation seeking views on calculating PAYE liabilities in cases of non-compliance for off-payroll working (IR35).
This technical consultation sets out the mechanism by which HMRC will be able to account for taxes already paid by individuals and their intermediary on income received from off-payroll working when recovering the tax due under PAYE from the employer.
It includes a draft Statutory Instrument (SI), the Income Tax (Pay As You Earn) (Amendment) Regulations 2024, and several items of draft guidance/
The draft SI contains detailed provisions to be introduced in the Income Tax (Pay As You Earn) Regulations 2003 to allow the PAYE liability that is recovered from the deemed employer to be reduced by amounts of tax already assessed and/or paid by the worker and their intermediary.
It also contains conditions under which it can apply, the mechanics of the recovery and the appeal rights associated with it.
People who work through their own intermediary (eg a personal service company (PSC)) are advised to consider this consultation as are medium and large-sized clients, public authorities, agencies, partnerships and individuals who engage people who work through their own intermediaries.
HMRC suggests that it will also be of interest to HR managers and those who deal with recruitment processes and payroll.
Full details, including the various drafts, can be found on the GOV.UK website and the deadline for submitting comments is 22 February 2024.
HRInform – 26-Jan-24
Our HR comment: HMRC asks for comments on IR35 | Consensus HR – Herts, Beds
Matthew Chilcott FCIPD, ACEL, Owner of Consensus HR comments: “It is good to see that the HMRC are asking for comments in relations to payments in relation to IR35 as this has been a rather complicated system since its introduction. The IR35 – off payroll working rules make sure that a worker (sometimes known as a contractor) pays broadly the same Income Tax and National Insurance as an employee would.
The rules apply if the worker who provides services to a client through their own intermediary would have been an employee if they were providing their services directly to that client.
The Gov.UK website has detailed information in relation to this and who the rules apply to etc.
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