The Chancellor finally brought the speculation around the government’s proposed Controlling Persons legislation to a close when he delivered his autumn statement to Commons yesterday.
“The Government has decided not to proceed with the proposal to tax those who meet the deﬁnition of a controlling person at source. This is because HMRC’s new approach to policing IR35, along with the measures introduced in the public sector this year, are sufﬁcient to prevent the loss through disguised employment in this way”
It would, however, be naïve to assume that the spotlight which has been so frequently turned to the tax arrangements of freelancers and contractors is finally seeking a new target. The chancellor finished by stating that “The Government will keep this area under review.”
Whether the new approach to the policing of IR35 relates to the recent administrative reforms by HMRC (in May), or a new statutory amendment, is unclear and a point on which an HMRC representative requested further clarification from the Treasury, which declined to comment.
Regardless, it’s clear that the legislation is here to stay, along with the recent reforms which are still officially being implemented on a ‘trial’ basis.
It seems that the debate in respect of taxation reforms is far from over for Freelancers and Contractors but the abandonment of the proposed Controlling persons’ legislation is welcome and positive news which comes at a time when Freelancers and Contractors are already facing increasing burdens brought about by legislative changes.