Latest legislation affecting contractors

Contracting can be one of the most rewarding ways to work – it gives you greater flexibility over who you work for and when you work. It can also provide the opportunity to work on some truly awesome projects.

Yet, anyone who works as a contractor will know how much legislation governs the work of a contractor. Particularly those who choose to work through a limited company.

In this article we discuss the latest legislation that will affect contractors:

IR35 – Intermediaries Legislation

We can’t have an article on legislation without mentioning IR35, or the Intermediaries Legislation as it also known. IR35 has been around since 2000 and has gone through several transformations since then.

Most recently, in April 2017, the off-payroll rules were imposed on public sector contractors. Many public sector organisations decided it best to impose a blanket ban, which meant hundreds of contractors who were legitimately outside of IR35, are now treated as employees for tax purposes. They effectively get taxed as an employee but aren’t entitled to the benefits of employment i.e. holiday, sick, paternity or maternity pay.

In May this year, the consultation was started to investigate the impact of extending this to the private sector. Many are saying that this consultation is just a procedure that HMRC has to show they are going through. And, in reality, they have already made the decision to introduce it into the private sector.

Only time will tell, what will happen. We are sure to keep you updated on any developments.

Loan Charge

The Loan Charge is a piece of legislation that comes into force in 2019, but we feel it is important to highlight its impeding effect on some contractors.

The Loan Charge will affect contractors who have willing used disguised remuneration schemes to reduce their tax liabilities, and also those who were unwittingly talked into using such a scheme. Disguised remuneration schemes effectively let contractors take a loan (that was generally never repaid) instead of a salary. HMRC became concerned that these schemes were being used to reduce tax liabilities. The Finance (No. 2) Act gives HMRC the power to tax members of these schemes going back almost 20 years.

The Loan Charge will apply if the:

• Loan was arranged on/after 6th April 1999, and part or all of the loan is outstanding on 5th April 2019
• Loan was arranged on 5th April 1999 and would have fallen into the new disguised remuneration legislation

If you fear you may be affected by the Loan Charge, you have several options:

• Get in contact with HMRC to discuss a possible settlement package. To do this you will need to forward all relevant information to HMRC by the end of September 2018
• If allowed, pay back the loan in cash by 5th April 2019. This will wipe out any potential tax liabilities
• Pay the Loan Charge. Considering that PAYE and NIC due may be considerable due to the timeframe involved
• Prove the scheme should not be subject to the retrospective taxation. This is a risky option as it may be hard to successfully prove this

GDPR

GDPR has been extensively covered in the last few months. Reports have mainly discussed the measures that organisations must have in place to seek your consent to use your information and this information is stored.

However, what happens if you are privy to handling others information? If you are a contractor who has access to personal information that an organisation holds, as a ‘third party’ you must ensure that you have procedures and policies in place to protect this data against an attack or a breach.

It is important that you assess your current policies and procedures and if necessary take immediate action to ensure they are GDPR compliant.

Need a hand?

If you would further information on the Intermediaries Legislation or Loan Charge, speak to a member of our team on 01962 867550 or contact us here.

Why not download our ‘guide to contracting’ to get more advice on all matters contracting.