The IPSE is calling for more clarity on IR35 following the news that two government departments have faced compliance issues.
The Ministry of Justice (MoJ) and the Department for Environment, Food and Rural Affairs (Defra) have received tax bills totalling just over £120 million for IR35 non-compliance.
The IPSE believes that this highlights just how confusing IR35 can be if even the government can make costly mistakes when determining the status of a contractor.
Andy Chamberlian, Director of Policy at IPSE, commented, “The fact that two major government departments have run into trouble with their IR35 compliance show just how complicated and confusing the regulations are. Even with guidance, support and training from HMRC, the MoJ and Defra have not made accurate status determinations. For private sector organisations that aren’t as connected to HMRC, they will almost certainly find it equally challenging.
“The revelations that these huge tax bills are owed prompt a further question: has tax already been paid on these engagements? If it has, then HMRC is in danger of collecting too much tax, which is against its own principles. IPSE is calling for an offset mechanism to be introduced to ensure that double taxation can not incur.”
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