Quiet Spring Statement offers little disruption to contractors
Despite fears of swingeing changes to taxation for independent contractors, in particular, further changes to the IR35 rules, the Chancellor delivered a Spring Statement that offered only minor amendments.
The lack of change will be welcomed by some seeking greater certainty in uncertain times, but many contractors will be disappointed that Philip Hammond didn’t act to slow down or reverse the damage done by the upcoming off-payroll rules or concerns about loan charges.
A number of documents and consultations published post-Statement on the Treasury website confirmed that IR35 would go ahead, but also introduced new proposals that could have a wider impact on contractors, in particular where HMRC suspects ‘disguised remuneration’.
“As announced in December 2010, the government will introduce legislation to target arrangements intended to disguise remuneration”, HM Treasury said.
“This includes legislation to ensure income tax applies to…. third-party arrangements and a new charge on disguised remuneration loan balances outstanding at 5 April 2019.”
Separate documents also confirmed that Making Tax Digital would go ahead as planned on 1 April 2019.
Spring Statement documents state: “Mandatory digital record keeping for VAT for businesses over the VAT threshold (with turnover over £85,000) comes into force from 1 April.
“This is an important first step in this modernisation of the tax system to which the government remains committed.”
However, it wasn’t all talk of tax raids on contractors in the Spring Statement as the Chancellor also announced that the Government would do more to tackle “the scourge of late payments”.
According to new consultation papers, the Government will introduce new rules that will require larger businesses to log payment performance in their annual accounts.
This has been introduced following calls from the Federation of Small Businesses (FSB) to tackle the issue. Celebrating their success, the FSB said: “Poor payment practices by big businesses towards their smaller suppliers are rife and pernicious, leading to the closure of 50,000 small firms a year,” the FSB said.
“The end of late payments could finally be in sight. It can’t come soon enough, to bolster small businesses at a time when they are in great need of support and a lift in confidence.”