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The Chancellor has today delivered his Autumn Budget, during which he restated his commitment to support UK businesses. Despite this he has announced that the 2017 public sector off-payroll reforms will be rolled out to the private sector from 2020. Our chief executive, Julia Kermode, comments:
“The announcement to delay the roll-out until 2020 shows that the Treasury has listened to the concerns of stakeholders like ourselves who have been campaigning hard and will give us time to work more with policymakers to ensure they get it right. A delay will give businesses and freelancers time to prepare for the inevitable complexities of implementation.
“In an interesting move, the Chancellor decided to level the playing field between public and private sectors, but only for large and medium businesses, thus letting the smallest employers off the hook. This is somewhat foolhardy given that large businesses are precisely the ones that are least well-placed to accommodate the change due to the impact on their IT infrastructure should they need to process deemed payments to their contractors. The reforms dictate complexities in paying off-payroll workers’ invoices that require both accounts payable and payroll software to “talk to” each other – functionality that most large businesses simply do not have. To achieve this will require a significant IT development programme, so an 18 month lead-time will be welcomed I’m sure. However, businesses will need to start planning their IT development very soon, at the same time as grappling with the implications of Brexit. The Government claims to be supportive of businesses but they are not making things easy for them.
“What’s more, we will undoubtedly see an exponential proliferation of tax avoidance schemes as an inevitable consequence, as we have seen in the public sector. With a reduction in income, large numbers of contractors working in the public sector have been enticed by non-compliant tax avoidance schemes that reduce their tax and NI contributions by disguising remuneration as ‘something else’ such as annuities, loans or even marketing vouchers. However, the reality is that the tax and NICs will still be due and HMRC will pursue the individual for this, and with interest, and however tempting, contractors must resist such schemes. We will continue lobbying for all such schemes to be stamped out before any IR35 reforms in the private sector.”