UK government faces calls to end IR35 double tax anomaly
Campaigners have called for the UK tax collector to respond to a consultation on how to avoid tech contractors paying a double tax while their status is defined.
When HMRC finds organizations have made errors in judging off-payroll workers' status, the employer is liable for tax and national insurance that should have been deducted from the fee paid to the off-payroll worker had the correct status been awarded. HMRC could get more tax than is due because the worker may have already paid tax and NI on the same income when they were judged outside IR35.
"The longer IR35 is double taxed, the more risk-averse businesses are likely to be and the more damage done to the flexible workforce. It's a relatively simple fix too. This is a fundamental flaw in this legislation – one that the government has been aware of for years and, amazingly, has done nothing about.""HMRC collects the amount due in accordance with the law at that time.
The measures first came into effect in the UK public sector in 2017. The British government hoped the reforms would recoup £440 million by bringing 20,000 contractors in line.
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