In its response to the Treasury and HMRC consultation proposing changes to the off-payroll working rules (IR35) for engagements in the private sector, the Chartered Institute of Taxation (CIOT) has suggested that there is a better option than simply extending the public-sector deduction at source rules to the private sector. It suggests the consideration of an approach that builds on existing record-keeping requirements and a requirement to secure supply chains but which also requires the business to e-file a report of payments made to personal service companies to HMRC on a regular basis.

This is an area that many taxpayers will be concerned with as, if HMRC’s preferred option within the current consultation proposals is implemented, it will likely mean (a) a significant additional compliance burden being placed on private sector employers; and (b) individual taxpayers having to re-evaluate their tax position and potentially reorganize their affairs to minimize the risk of being caught by IR35.

A copy of the CIOT’s comments can be viewed here