HMRC have made an announcement that has been welcomed across both our industry as accountants and by self-employed contractors up and down the UK.
HMRC has launched a consultation on the IR35 off-payroll working rules, which could completely eradicate the huge problem of double taxation. Many industry experts have agreed how morally wrong the legislation is and how it’s a welcome, long overdue review.
Currently, the legislation means that HMRC can collect more than it should do from contractors through the tax bill, as they do not offset the tax that has already been paid.
Because of this, numerous cases have been raised where a business has faced tax liabilities more than 4 times the perceived underpayment of tax.
The review will run for 8 weeks and end on the 22nd June, when we will learn if changes will be made to stop this from happening. The new legislation would be introduced and tax liability would be shared between the client and the worker, by estimating the offset of tax already paid by the worker and their intermediary.
This offset will also be retrospective for unsettled bills spanning back as far as April 2017. Bills that are still yet to be settled could be reduced by up to 75%.
HM Revenue & Customs (HMRC) has confirmed that the new rules could be in place by April 2024. We will be keeping a very close eye on this as it progresses and will let you know through our blog as soon as we have an update on the situation.
Other HMRC news
IR35 experts have warned that HMRC will be cracking down even harder on contractors since the tribunals against Gary Lineker and Eamonn Holmes.
HMRC looks like they will continue to keep a close eye on famous TV presenters. There is already talk of HMRC appealing their case against Gary Lineker, with rumours suggesting proceedings have already begun to appeal to the Upper Tribunal. If it rules IR35 to apply, a lower court would investigate Lineker’s working practices.
In the last few years, HMRC have taken a number of household nails to tribunal over “unpaid tax” under IR35. They have also lost cases against the likes of Adrian Chiles and Lorraine Kelly.
Choosing a Contractor Accountant
Having an accountant that knows you and your work inside out is vital for ensuring you pay the right amount of tax, your books are balanced and your finances are in check. IR35 can be notoriously difficult to navigate, but with the right accountant by your side, it’s easy to tackle.
It’s not just IR35 that can make becoming a contractor quite daunting. Freelancing and contracting means you can deliver your service and skills in a way that works for you in terms of a work/life balance. However, it does mean that you have to plan your finances accordingly, to allow for time off, holidays or quieter periods in the working month.
Of course, hiring a contractor accountant to keep your paperwork up to date and your tax assessments completed is a big decision to make.
Making the right choice when deciding on an accountant is incredibly important, but what should you be looking for?
A firm that keeps on top of industry news
It’s so important to have an accountant that knows what is going on within the industry. With different legislation changes happening regularly, you need to know that you’re getting the most accurate and up to date advice possible.
Experts in contractor accounting
Being a contractor means you have to comply with complex legislation including IR35. The off-payroll working rules can apply if a contractor provides their services through their own limited company or another type of intermediary to the client.
IR35 makes sure that workers, who would have been an employee if they were providing their services directly to the client, pay the same income tax and National Insurance contributions as employees. Having an accountant that knows exactly how all this works will mean you’ll always be in a good place financially.
Tech-Savvy accountants
Gone are the days of paperwork and face to face meetings. In 2023, you need an accountant that you can contact however is most convenient for you.
With the Making Tax Digital movement, there has been a shift to using cloud based accounting software and submitting records digitally to HMRC, and the best way of doing this is by storing everything digitally from the start. Submitting your tax records and financial information is so much easier now accountants use the best software.
In a digital world, if your accountant is still asking for paper copies of receipts in the post, mailing paperwork to sign and keeping physical copies of your records, they’re probably not as up to scratch as they should be.
At Gorilla, every client uses FreeAgent at no extra cost. It allows you to run your business from anywhere, upload photos, check your cash flow and stay on top of your tax easily, and most importantly, securely.
Reputation matters
If an accountancy firm has a bad reputation, there’s a reason why. It’s important to find an accountant that has a good reputation and has excellent reviews from their current clients.
If a company has great reviews on Trustpilot and Feefo, it can be just as good as being recommended a company by your friends and family. It’s a great way of gauging how others have found the service and if they have had any issues. Luckily for us, we have fantastic reviews which you can read here on Trustpilot and Feefo!
When is it time to join Gorilla?
As the new tax year began last month, now is still a perfect time to join us. Switching accountants couldn’t be easier. We make the process quick, efficient, and hassle-free so that you have peace of mind that your finances are all in order.
Some think that an accountant is an unnecessary expense – especially if you’ve not made any money from contracting yet. However, it is worth having an accountant in place before you begin.
Working with specialist contractor accountants like Gorilla will make the process of setting up as a contractor much easier and smoother, and you’ll know exactly what your tax obligations are from the get-go.
You can learn more about contractor accounting at Gorilla here or join us today.
