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Also known as a cable-modem, it is a cable used to connect your computer to a high speed internet connection. Through the computer internet cable, internet data passes through it and is converted into internet connection. Data is then converted and is interpreted by your computer.
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The UK contracting community is calling on the government to again delay the start date of the IR35 tax avoidance reforms in the private sector, as research highlights a lack of preparedness among the self-employed for the changes.
According to a poll by Ernst & Young’s online tax consultancy arm, EY TaxChat, out of more than 500 self-employed workers, just under half (44%) said the roll-out of the private sector IR35 reforms should be delayed, while 72% said they were yet to prepare for them.
The reforms are being introduced on 6 April 2021 as part of a multi-year push by HM Revenue & Customs (HMRC) to clamp down on disguised employment and tax avoidance within the self-employed sector.
The changes will see medium to large private sector firms assume responsibility for determining how the contractors they engage with should be taxed, whereas currently it is up to contractors to decide for themselves whether the work they do, and how it is performed, means they should be treated as employees for tax purposes, or not.
Once the reforms come into play, if the end-client decides the contractor’s engagement is in-scope of the IR35 reforms (inside IR35), the individual will be liable to pay the same income taxes and national insurance contributions (NICs) as a permanent employee would.
In HMRC’s view, allowing contractors to decide for themselves how they should be taxed has resulted in the system being used and abused by some who have sought to deliberately mis-classify their engagements as outside IR35 to minimise their employment tax liabilities.
The changes were initially pegged to come into force in April 2020, but the government delayed the start date by 12 months to give medium to large private sector firms in-scope of the rules more time to prepare because of the onset of the Covid-19 pandemic.
HMRC recently issued guidance and has repeatedly reiterated the government’s commitment to pressing ahead with the reforms this year, and for this reason, contractors are being urged to start preparing for the new rules now.
“The implementation of the off-payroll working rules has been postponed once already, yet we are still in a position where many self-employed individuals appear to be in the dark,” said Mark Lee, UK EY TaxChat leader.
“With the new rules coming into effect from early April, it is now a matter of urgency for those affected to understand how they may be impacted – not only from a tax perspective, but in terms of earnings and cashflow.”
The EY research shows that more than one-third of those polled (36%) are unaware of the IR35 reforms, and a further 31% said they know about the impending changes but do not know how they might be affected. Also, 31% of the self-employed participants in the EY poll claimed the changes would not affect them at all.
Among those who have taken action (32%) to prepare for the reforms in advance of the start date, 11% said they had consulted a tax adviser, 11% had conducted research into the reforms on the internet, and 4% said they had spoken directly to HMRC about the changes.
Meanwhile, 4% said they had contacted their end-client about the situation, and just 2% said they had spoken to their employment agency.
Lee said it is possible that the roll-out of the IR35 reforms may have passed some contractors by, given what else is going on in the world right now, but it is important that the self-employed get clued up on what is happening as soon as possible.
“With the pandemic already significantly affecting many self-employed individuals, this topic may be one that has been missed or pushed to the periphery,” he said.
“Although there is so much else going on, we would encourage anyone uncertain of the changes to seek advice and to ensure they are ready, come 6 April.”
Dave Chaplin, CEO of contracting authority ContractorCalculator, said the research’s findings were surprising, given the extra time the government has given the private sector to prepare for the reforms, but anyone expecting the start date to be delayed further will be disappointed.
“We are aware of large numbers of firms that just never got around to it and have a misguided view that the chancellor is going to roll back primary legislation that is already enacted,” he said. “That is not going to happen.
“The Treasury is used to being asked for delays to legislation, because there are always those who leave things to the last minute. HMRC has been spoon-feeding everyone guidance for a year now, as have the rest of us.”