20 Mar, 2013

Budget Watch

20 Mar, 2013

Last year the Government proposed amendments to the Finance Bill, including extending the IR35 tax rules to ‘office holders’, a move which could have a major impact within the recruitment industry.

As the legal partner to the Association of Recruitment Consultancies (ARC), Lawspeed researched the basis for this proposed change. It quickly became apparent that the addition of a handful of words by the Finance Bill could mean a huge increase in the sums of taxes collected by HMRC, by dragging a wide number of roles performed by contractors into the IR35 net.

There has been a lively debate as to which roles could be caught by the term ‘office holder’ and it is now expected that Government will not be amending the wording as currently drafted in the Finance Bill. After speaking to our sources we understand that the Government will instead be issuing detailed guidance on the meaning of ‘office holder’. We await announcements in the Budget on Wednesday (20 March) for confirmation of this.

We are optimistic that the concerns raised by the ARC over possible misinterpretation have been recognised; however as usual the devil will be in the detail of the guidance and we are keen to hear exactly what the Chancellor will say.

Agencies that understand, and can react to, contractors’ IR35 concerns are likely to have a competitive edge over others.

Watch this space for a post-Budget update.