Businesses warned to prepare for IR35

Businesses warned to prepare for IR35

The Association of Chartered Certified Accountants has warned UK companies affected by the IR35 ruling to be prepared to file tax returns by no later than 19 April.

ACCA head of taxation Chas Roy-Chowdhury said companies must ensure sure they pay the correct amount of PAYE by this date at the latest.

He added: ‘This is an important and early deadline. Companies must analyse and evaluate those of their engagements which fall under the scope of the IR35 provisions in order to calculate the PAYE involved.

IR35 was designed to catch out individuals in full-time employment who said that they were freelance or self-employed. ACCA believes the government and the Inland Revenue have fundamentally misjudged what is really happening here.’

ACCA also expressed concerns about the impact of IR35 on income and corporation tax self-assessment.

Roy-Chowdhury said: ‘IR35 mistakes made under the self-assessment arrangements could prove to be a ticking time-bomb. If errors are made, they could lie undetected for years only to detonate in the future at huge expense to the individual or company concerned.’

ACCA, along with the ICAEW and other organisations including the Professional Contractors Group, the Confederation of British Industry and the Federation of Small Businesses campaigned against the introduction of the scheme, calling it fundamentally unjust.

IR35 regulations came into force in April last year, and removed many of the tax advantages previously held by contractors who operated through personal service companies.

Many believe it is unfair because it taxes one-person businesses more harshly than other organisations. Organisations such as the PCG have also argued that IR35 discourages contractors from trading in the UK and claims it contravenes the Human Rights Act. The PCG will be challenging the government in the High Court in March.

But the Inland Revenue has defended the legislation saying it ensures everyone who meets the accepted definition of employees paying tax on broadly the same basis.

Links

IR35: Exodus is real

Tax wars: Storm over double tax relief ‘echoes IR35’

Prime minister urged to repeal IR35

IR35: A taxing question

Contractors win first IR35 battle

Share

Subscribe to get your daily business insights

Resources & Whitepapers

Why Professional Services Firms Should Ditch Folders and Embrace Metadata
Professional Services

Why Professional Services Firms Should Ditch Folders and Embrace Metadata

3y

Why Professional Services Firms Should Ditch Folde...

In the past decade, the professional services industry has transformed significantly. Digital disruptions, increased competition, and changing market ...

View resource
2 Vital keys to Remaining Competitive for Professional Services Firms

2 Vital keys to Remaining Competitive for Professional Services Firms

3y

2 Vital keys to Remaining Competitive for Professi...

In recent months, professional services firms are facing more pressure than ever to deliver value to clients. Often, clients look at the firms own inf...

View resource
Turn Accounts Payable into a value-engine
Accounting Firms

Turn Accounts Payable into a value-engine

3y

Turn Accounts Payable into a value-engine

In a world of instant results and automated workloads, the potential for AP to drive insights and transform results is enormous. But, if you’re still ...

View resource
Digital Links: A guide to MTD in 2021
Making Tax Digital

Digital Links: A guide to MTD in 2021

3y

Digital Links: A guide to MTD in 2021

The first phase of Making Tax Digital (MTD) saw the requirement for the digital submission of the VAT Return using compliant software. That’s now behi...

View resource