HMRC to maintain compliance crackdown on several fronts
Tax inspectors have had their knives sharpened for a while, especially for the largest businesses, after HMRC admitted it is actively probing around half of the UK’s largest firms at any one time.
Since 2010, the Revenue has secured £185 billion in extra tax through investigation and prosecution. It is successful in more than 90% of criminal cases it brings to trial, and in 2018 secured more than 830 criminal convictions for tax and duty fraud – more than 80% of those charged.
The status of IR35
The Government have begun their review into how they can provide better support to the self-employed with the planned extension of the new IR35 ‘off-payroll’ rules to the private sector from April 2020.
Talking to Paul Lewis on BBC’s Money Box on 30th November 2019, Chancellor Sajid Javid committed to the review, which began on 7th January 2020, stating his intention to ‘make sure that the implementation of these changes in April is as smooth as possible’.
Following the initial reform to the IR35 rules in April 2017 which impacted public sector organisations, the government estimated that in the first 12 months the improved compliance generated additional revenues from Income Tax and National Insurance contributions of £550 million. The reform is due to be extended to medium and large companies in the private sector from April 2020, although the measures are contained in the Finance Bill 2019, which has yet to receive Royal Assent.
The measures as they stand shift the responsibility for operating the off-payroll working rules from the individual’s personal service company, to the organisation or business that the individual is providing their services to. HMRC issued guidance for those companies affected in April 2019, advising how they can prepare for the reforms. It is anticipated that this guidance will be updated following the conclusion of the review in mid-February, although this will leave those impacted with little time to implement processes ready to determine whether the rules apply to contractors they engage from 6 April 2020.
For further information on HMRC compliance, please contact Gemma Hedges on 023 8046 1259.