'Tax Day' tackles IR35 double taxation and umbrellas

The Government announced a package of technical tax policy proposals on 27 April 2023 that is aimed at supporting its ambition to simplify and modernise the tax system, tackle non-compliance, make the tax system fairer for taxpayers and to make the customs system work better for traders.

Among the 23 measures are the announcements on consultations on the double taxation of IR35 and measures to tackle non-compliant umbrella companies and the promoters of tax avoidance schemes.

Off-payroll working

The Government has published a technical consultation on a potential legislative change to address the over-collection of tax in relation to non-compliance with the off-payroll working rules.

This can arise from an incorrect employment status determination for off-payroll working purposes. In such circumstances, the deemed employer is liable for the full PAYE liability due on the income, however the worker and their personal service company may have already paid tax and National Insurance contributions (NICs) on the same income.

This consultation seeks input on a potential change to the rules to allow HMRC to set off the tax and NICs already paid against the PAYE liability, resulting in a more equitable distribution of the cost of the worker's tax liability.

Tackling non-compliance in the umbrella company market

The Government will shortly publish a summary of responses to the 2021 call for evidence on the umbrella company market. Alongside this, the Government will publish a consultation on policy options to regulate umbrella companies and to tackle non-compliance in the umbrella company market.

Tackling promoters of tax avoidance

As announced at Spring Budget 2023 the Government has published a consultation on the introduction of a new criminal offence for promoters of tax avoidance who fail to comply with a legal notice from HMRC to stop promoting a tax avoidance scheme.

The Government is also consulting on expediting the disqualification of directors of companies involved in promoting tax avoidance including those who exercise control or influence over a company.