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Government announces new IR35 rule statutory changes

The Finance Bill 2013 will contain the first statutory changes to be made to disguised employment rules in the better part of a decade, the government said.

Contractors and freelancers were relatively ambivalent about the news, given how George Osborne had already prefaced the announcement during his Autumn Statement last week. The chancellor did say that he had decided to dismantle a handful of proposals to tax ‘office holder’ contractors in the Statement, warning that he would ensure that the issue would instead be dealt with by strengthening and possibly expanding the scope of IR35 instead, and now with the new announcement yesterday concerning the expansion of the disguised employment rules, few freelancers were taken by surprise.

The new changes as proposed by the Bill makes the intent of the government very clear when it comes to treating any office holder that uses a personal service company in the same manner other professional contract workers are treated, industry experts say. In fact, there is some thought that the new legislation could see the public service companies employed by office holders become the responsible party as far as employment taxation is concerned in lieu of the firm contracting with the freelancer, though the current particulars of the expanded statutes are yet to be revealed in any coherent way.

This could end up being a major boon for employers who would no longer have the spectre of being accused of tax avoidance hanging over their heads, though again it is simply too early to understand the full ramifications of the announcement.

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