Information that the federal government has launched a session to deal with the ‘double taxation’ of IR35 underneath the off-payroll working guidelines has been universally welcomed.

The session, launched right this moment, will discover methods HMRC can account for taxes already paid by a contractor when calculating the tax legal responsibility owed by a enterprise within the occasion of non-compliance.

As issues stand, HMRC doesn’t issue within the tax already paid by the contractor through the engagement. It means companies (that are chargeable for IR35 underneath the off-payroll working guidelines) are overtaxed, ought to HMRC discover non-compliance.

The session will run for 8 weeks, till twenty second June.

Qdos CEO, Seb Maley, commented: “That is probably game-changing. The double-taxation of IR35 underneath the off-payroll guidelines is a large downside. HMRC doesn’t offset the tax already paid by a contractor when handing a enterprise a tax invoice. Put in another way, it means HMRC collects far more than it ought to. It’s morally unsuitable.

“A session marks progress. In concept, it’s a difficulty which might and must be solved comparatively simply too. Even so, I’m amazed that the federal government has refused to look into this till now. Westminster knew this was an issue a while in the past, however has performed nothing about it.

“The double taxation of IR35 offers needlessly risk-averse companies another excuse to not interact contractors – as a result of in the event that they’re discovered to be non-compliant, HMRC will over-tax them.”