HMRC has confirmed that it has launched an 8-week consultation on plans to roll out a legislative tweak that could stop to the government tax collection agency over-collecting tax in IR35 non-compliance cases, known as ‘double taxation’.
HMRC states that it could have a legislative solution in place by April 2024.
The consultation comes on the back of when calculating how much tax an organisation that is non-compliant with IR35 legislation organisation must pay, HMRC fails to take into account the corporation tax and dividend tax that the contractors employed by these non-compliant entities have already paid.
In other words HMRC doesn’t offset and as a result the taxman overcharges the freelancer who then has to claim the money back from HMRC.
Double taxation of the same income is a well-known deficiency in the off-payroll rules and fixing the issue is something that is welcomed, yet long overdue.
The consultation is due to run for 8 weeks and be concluded on June 22nd.
Further information regarding this subject can be found on the HMRC website.
Sources:
https://www.msn.com/en-gb/money/other/consultation-launched-into-double-taxation-of-ir35/ar-AA1ariwV
https://www.computerweekly.com/news/366536019/HMRC-confirms-potential-April-2024-end-date-for-double-taxation-issue-in-IR35-compliance-cases
https://www.contractoruk.com/news/0015885hmrc_launches_ir35_offset_consultation_stop_double_taxation.html
https://www.contractorweekly.com/tax-a-ir35-news/double-taxation-of-ir35-could-end-by-april-2024/
