by David Watkinson
Well here we are again in January. Everyone at WatkinsonBlack hope that you all had a really enjoyable Christmas with your friends and family, and that you are now looking forward to a successful 2020.
Like all accountants we are buckling down to a busy month ensuring that, wherever possible, clients do not suffer any fines or penalties for not getting their tax return in on time. Because of this we are writing this column very early. In fact, we have still to vote in the General Election so as we write we do not know the result. Whoever wins, there must be a very early budget to prepare the country for the next fiscal year which starts on 5th April. Therefore, whatever you read may have been overtaken by events, so watch out for any changes in the next few issues.
One major change that has been in the making for a considerable time is the change to the IR35 legislation. This was originally proposed in 1999 and introduced into law in April 2000. It was designed to counter perceived tax avoidance by people working through a Limited Company. However, it proved singularly unsuccessful and has been amended several time since. The last major amendment was in 2017 when the responsibility for determining the status of a “worker” in the public sector was moved from the “worker” to the “engager”. The current proposal is to extend this to the majority of the private sector from April 2020.
As part of the IR35 introduction the tax office introduced a “Check Employment Status for Tax (“CEST”]” tool. Designed by HMRC to help taxpayers decide whether they were caught by the IR35 or not, this has proved completely unreliable due to it being biased in favour of HMRC. Because of this, HMRC has suffered a defeat in the majority of the cases taken before the Tax Tribunals, and many of those cases took years to conclude and caused a large amount of distress to the taxpayer. Whilst there have been some amendments to the CEST over the years it has never been successfully amended to take proper account of the recognised “badges of trade”.
HMRC has recently suffered a significant defeat in an important case concerning entertainers at the BBC. In view of these defeats, and the inevitable conclusion that even the people who designed the rules do not understand them, all of the main parties in the recent election promised to review the proposed extension of the legislation. Let us hope that this is one election promise that is kept.
WatkinsonBlack have considerable experience in all areas of taxation and business services, including providing a very cost-effective payroll bureau service. If you want to arrange a no-obligation initial meeting on any taxation or accounting matter then please contact us. Please note that these ideas are intended to inform rather than advise and you should always obtain professional advice before taking any action.
For more information call 01925 413210 or visit www.warringtonaccountants.co.uk