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IPSE: tread carefully over tax relief changes, please

The Association of Independent Professionals and the Self Employed has asked the Government to tread carefully when it comes to incoming tax relief changes.

IPSE initially welcomed changes to expenses rules that George Osborne announced in the Budget on March 18th, with the chancellor announcing the Government wants to crack down on any agencies using tax reliefs inappropriately for both travel and subsistence. The new changes aren’t geared towards challenging tax relief for those legitimately working as contractors but instead those who purport to be self-employed but actually work as an employee.

However, the trade industry body said that the Government needs to be cautious when it’s putting these new regulations together, as rules that are too broad or that aren’t constructed carefully enough to snag legitimate sole traders in too wide a net. The new regulations are likely to make individuals working through their own company have to prove that they’re not employed by their end client by proving they’re not under their supervision, direction and control of the client, according to IPSE policy and external affairs director Simon McVicker, and he hopes that the legitimately self-employed aren’t going to have to suffer under an unwieldy burden of proof to that end.

Honestly this could be a long row to hoe for the Government, as I don’t see how you’re going to be able to make the distinction between contract worker and employee without some sort of test. At the same time, IPSE says that the Government is taking the problem seriously, as officials from Her Majesty’s Revenue & Customs have already been in contact with the trade industry body – something that McVicker says is a comforting fact and indicates the Government is taking this issue as seriously as it can. If HMRC did indeed reach out without prompting, I agree that it’s obvious that someone at the tax authority is thinking ahead for once; it’s a very nice sign indeed if you ask me.

For what it’s worth, I can only imagine that this is going to turn into something like an IR35 situation in the future. Heaven knows the guidance for disguised employment isn’t exactly crystal clear, so I’m crossing my fingers in hopes that these new regulations won’t be a bloody quagmire.

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