It has been announced that Chancellor of the Exchequer, Philip Hammond, on Monday 29th October, will present the 2018 Budget Statement. Many were expecting the Autumn Budget to be presented at a later date, but it has been brought forward to avoid clashing with any potential fall-out from the final Brexit negotiations.
IR35
For the contractor industry and IR35 experts, this news was acknowledged somewhat begrudgingly. As they presume this means the IR35 legislation will be extended to the private sector sooner rather than later.
Kate Cottrell, IR35 expert and managing director at Bauer & Cottrell commented on the announcement:
“I was hoping that the Budget would be delayed, so that whatever government decides regarding rolling out the new rules to the private sector, would leave too short a timetable to implement them from April 2019”.
However, as ContractorUK explained, if the Government wish to implement IR35 in the private sector by April 2019, by having the Budget early, HMRC may then believe they have given private sector contractors plenty of time to prepare for the oncoming changes.
Earlier in the year, BBC presenter Paul Lewis wrote an article for the Financial Times advising readers to “expect an extension of the liability rules to the private sector in the Budget this autumn with big projected savings from 2019/20.”
Although, others such as ex-tax official Carolyn Walsh now dispute that the 2018 Budget Statement will not extend IR35 to the private sector due to the events that have unfolded this year. From various IR35 case defeats for HMRC, scepticism of the CEST tool’s reliability, as well as the recent holiday pay win for a contractor, caught inside IR35.
What’s more, it’s believed that the Autumn Budget 2018 will be used to respond to alternate IR35 reform models industry specialists and key stakeholders have suggested. Overall, Kate Cottrell determined that:
“We should get a response to the private sector consultation with the Budget papers, which no doubt everyone affected is anxious to see […] If they do decide to go ahead [from April], then there would be an extra month of preparation time for the private sector… we [may find that this is] the only consolation.”
Making Tax Digital for VAT
Another highly anticipated topic for the 2018 Budget Statement is whether Making Tax Digital (MTD) for VAT will be administered on or after the 1st April 2019.
HMRC is confident in the effectiveness of the system. However, consulting tax editor for Accountingweb.co.uk. Rebecca Cave raised concern that there have not been adequate stress tests for the systems. She explained that,
“The pilot project is still in private beta and the APIs have only tested live data from domestic transactions. Although dummy data for international transactions, partnerships, VAT divisions, members of VAT groups, annual returns and overseas traders has presumably been tested within the HMRC sandbox”.
Keep your eyes peeled for further coverage from us once the 2018 Autumn Budget has been presented.
If you manage a limited company and are concerned about IR35, at K&B Accountancy Group, we offer a package designed to support contractors against IR35. The Essential IR35 package specifically includes IR35 advice, review and protection from our partners and experts Bauer & Cottrell. What’s more, with the upcoming MTD implementation, our contractor accountants are also FreeAgent experts and can guide you through the accounting software until you become an expert yourself! Get in touch today for more information.
Working in the public sector, caught inside of IR35 or just not interested in running a limited company? Cloud9 Umbrella can support you with a straightforward, honest and compliant payroll service. The team at Cloud9 works hard to provide total transparency for contractors and ensure full employment rights for workers.
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