HMRC to fix double taxation risk of IR35 pay

HMRC has launched a consultation to look at reform of the double taxation problem with off-payroll working payments

HMRC is considering whether legislation should be changed to offset taxes already paid by a contractor or their personal services company in the event that they have been incorrectly classified as a self-employed trader.

Current legislation does not allow HMRC to set off amounts of tax already paid by a contractor and their intermediary against the PAYE liability of the deemed employer – meaning that businesses can often be taxed twice.

HMRC is considering whether to allow for such a mechanism for off-payroll working purposes, which would work in a similar way to existing provisions in the PAYE Regulations 2003.

HMRC said that any changes would be implemented from 6 April 2024.

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