Some Positive News for the Interim / Contracting Community
2012 Autumn Statement HM Treasury – Some Positive News for the Interim / Contracting Community
Earlier in the Year, HMRC had issued a consultation paper setting out proposals to tighten IR35 compliance by requiring organisations engaging “controlling persons” through personal services companies to deduct income tax and national insurance from fees paid to their companies.
HMRC were looking at a new definition for a “controlling person” defined as someone from the contracting organisation who is able to shape the direction of the engaging organisation during the year. “This would be someone who has managerial control over a significant proportion of the organisation’s employees and/or control over a significant proportion of the budget of the organisation,”
Today, we have leant that the Government has decided not to go ahead with the proposal detailed in the consultation paper, to tax those who meet the definition of a controlling person at source. It was decided that the Government’s current policing of IR35 and future strengthening of intermediaries legislation (IR35) is adequate to prevent the loss through disguised employment in this way. HMRC will be reviewing this periodically.
This is positive news for the interim/contracting community.