George Osborne’s Autumn Report – Affect on IR35 for Contractors?

An Update from FW Accounting on George Osborne’s Autumn Statement 2012 and how it affects Contractors’ IR35 status from Mervyn Stanley of FW Accounting. If you missed it, you might be interested in the overview of the April 2012 Budget – you can check this out here

Mention of IR35

George Osborne made only one mention of IR35 in his Autumn Statement delivered earlier this week, to say that the 1999 legislation is sufficient to stop his attack in the last budget on ‘controlling persons’ from advancing. All but abandoning the proposal, which said a contractor who is a controlling person or office holder at their client outfit should be taxed at source, the chancellor said he would ‘not proceed’ with it, in light of the recent changes to IR35.

According Mr Osborne’s full statement, HMRC’s new approach to policing IR35 – chiefly the Business Entity Tests, along with measures introduced in the public sector – the off-payroll rules, are sufficient measures to tackle controlling persons. You can take the FW Accounting Business Entity Test to measure if you are Low Medium or High risk here.

Less positively though, the Treasury immediately advised that the government is strengthening the existing intermediaries legislation to put beyond doubt that it applies to office holders for tax purposes.

Whether that strengthening of IR35 relates to the recent administrative reforms by HMRC (inMay), or a new statutory amendment, is unclear – an HMRC spokesman referred questions to the Treasury, which declined to comment.

Regardless of its shape, the strengthening of IR35 was seized upon by industry experts as proof that not only is the legislation here to stay, but that also the government is content with the reforms it introduced, despite them still being on only a trial basis.

If you have any queries on how the Autumn Statement may affect you please do not hesitate to contact your Account Manager at FW Accounting, we are always happy to help with any query, big or small.

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