Flexible workers who specialise in interim management roles will today be only fractionally more enlightened about government plans to reform IR35 laws to encompass ‘office holders’: the chancellor’s Red Book made only a passing reference to the issue, confirming that the government will proceed with the reform.
Umbrella Company Employees working as interim executives will not be affected by the rule change, as they already automatically pay tax and NICs on a PAYE basis; however, many limited company flexible workers had hoped for further clarification about the reform.
They were instead treated to a short paragraph (paragraph 2.192 of the budget document) simply stating: “IR35: As announced at Autumn statement 2012, the government will make a small amendment to the existing IR35 provisions to equalise the tax and NICs treatment of office holders and put beyond doubt that the legislation applies to office holders for tax purposes. (Finance Bill 2013).”
Elsewhere, the chancellor’s announcement that the government would proceed with a crackdown on tax-avoiding offshore Umbrella Companies met with approval. Tom Hadley, the REC’s director of policy said: “We applaud the announcement of a crackdown on tax avoidance by offshore intermediaries and will work shoulder to shoulder with the government to level the playing field and support those in our industry who do the right thing.”
He added: “We will continue to work with the government to ensure amendments to IR35 are as clear as possible.”