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Off-payroll: Collecting debts from third partiesby
The new off-payroll rules will allow HMRC to recover unpaid PAYE liabilities from other relevant parties in the labour supply chain. Rebecca Seeley Harris reviews how this power will work.
It is worth explaining briefly the phraseology and interaction of IR35 and off-payroll: chapter 8 and chapter 10 of ITEPA 2003. The term “IR35” refers to the law in Chapter 8 of ITEPA 2003 and was the original name of the press release used to announce the tax initiative in 1999.
Chapter 8 provides the details for when the assessment (whether IR35 bites) is made by the contractor. It applies up to 6 April 2020 in the private sector and will continue to apply after 6 April 2020 for when the engager (referred to as the “client” in the law) is a small business.
Chapter 10 provides the legislation for the assessment (inside or outside IR35) to be made by the engager in the public sector, and by engagers in private sector where they are medium or large organisations. So, technically “IR35” refers to only the assessment by the contractor, although it is widely used to describe both Chapter 8 and Chapter 10.
There is, however, a significant difference between the two chapters as will be explained later but being “inside or outside IR35” is a phrase that is used to describe whether tax will be deducted or not.
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Rebecca is the UK's most prominent thought leader and leading expert in ‘employment status’ including IR35, off-payroll working and the law involving independent contractors and the self-employed for the purposes of tax and employment law. Rebecca has run her own consultancy for the past 20 years covering all employment status issues such as...