Chancellors Autumn Statement - ARC warns against imposing new tax avoidance rules
Chancellor’s Autumn Statement - ARC warns against imposing new tax avoidance rules
Now that a few days have passed since the Chancellor’s Autumn Statement, the full implications of George Osborne’s announcements to the recruitment industry can be more readily assessed.
Adrian Marlowe, Chairman of the Association of Recruitment Consultancies (ARC) commented “We welcome the decision not to pursue the proposed & lsquo;Controlling Persons’ legislation, consulted on earlier this year. We had advocated that it should not be pursued. It would have posed a direct challenge to the flexibility of the contractor supply model and the idea in our view simply could not have worked. However the issue is not dead as it appears that new rules are planned to be included within the forthcoming draft Finance Bill to be published on 11th December 2012”.
The announcement regarding controlling persons was accompanied by a statement that the government would be strengthening IR35 to put beyond doubt that it applies to office holders for tax purposes. This move will supposedly bring the payment of PAYE tax into line with the current position with supplied officeholders as regards National Insurance Contributions.
The Autumn Statement also makes it clear that the government will undertake an internal review of offshore intermediaries being used to avoid tax and NICs and report on its findings at the Budget in March as well as a joint consultation between the Cabinet office and HMRC on the use of the procurement process to deter tax avoidance and evasion, potentially another layer of measures to join the recently introduced & lsquo;Off-payroll policies’.
Adrian Marlowe commented further “the full effects of the off-payroll policies that have been rolled out since the end of the summer are only now beginning to bite. We recognise that the government is limited by what it can achieve outside of legislation but we warn against rushing into imposing further measures too soon afterwards which risks damaging the market based contracting structure. The Controlling Persons consultation shows the strength of the consultation process and we urge the government to use a similar process before introducing new initiatives.”