Tax & admin · 18 May 2018

Tax avoidance in private sector targeted by new government consultation

IT consultants could be affected by the consultation
A new consultation looking at how to increase compliance with existing off-payroll? working rules in the private sector, has been launched today by the government.

First announced by the chancellor at last year’s Autumn Budget, the consultation will look to improve rules surrounding contractors who work through their own firm, but are effectively working as employees, to ensure they pay the correct amount in tax.

Recent research has found that by 2023, up to 1.2bn a year could be going missing from the public purse as a result of people misinterpreting off-payroll working rules and incorrectly paying tax as if they were self-employed.

The rules are designed specifically so that contractors, such as IT specialists and management consultants, who in practice work for a third party but work through their own company, pay the right tax.

The government has assured the genuinely self-employed that way will not be affected by the consultation, which will look at how to make the off-payroll rules more efficient.

it’s very important that we recognise the hard work of contractors across all sectors, who contribute to our growing economy, said the financial secretary to the Treasury, Mel Stride.

but it’s also right that we have a fair tax system that balances efficiency and simplicity for taxpayers, while also supporting our vital public services.



Fred Heritage was previously deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London.