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IR35 reforms: IT professionals advised to recover tax they might have paid too much in off-payroll settlements

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With the federal government set to repair the settlements balance out concern from 6 April, professional insurance coverage company Qdos is advising people who worked for non-compliant IR35 organisations to see if they can recover any cash they have actually paid too much


  • Caroline Donnelly, Senior Editor, UK

Released: 21 Mar 2024 10:55

IT specialists discovered to be improperly running beyond the IR35 off-payroll working guidelines throughout the 2019-2022 tax year have up until 5 April 2024 to recover possibly countless pounds in tax from HM Revenue & & Customs (HMRC) they might have paid too much.

Specialist insurance coverage company Qdos is advising specialists to inspect if they are qualified to recover any tax they might have paid too much as an outcome of HMRC stopping working to consider the earnings, corporation and dividend tax they had actually currently paid when computing their IR35 liabilities.

“Individuals who have actually been provided IR35 tax costs are most likely to have actually been overtaxed when paying, as HMRC typically does not immediately balance out the earnings tax, corporation tax and dividend tax these employees might have currently paid on their earnings when the IR35 liability is determined,” stated Qdos in a declaration.

The start of HMRC stopping working to consider the tax professionals might have currently paid when determining their IR35 liabilities can be traced back to the roll-out of the general public sector IR35 reforms back in 2017, however it is uncertain the number of specialists might have been impacted for many years.

The matter has, nevertheless, just recently been attended to by means of a legal tweak to how the IR35 legislation works, following years of allegations that the federal government firm has actually been over-collecting from non-compliant public and economic sector entities.

This legal modification is because of enter force from 6 April 2024 and implies that the quantity of corporation, dividend and earnings tax professionals have actually currently paid will now be factored in when HMRC computes just how much tax is owed by a non-IR35 certified organisation.

As verified by Qdos, however, impacted specialists can make an overpayment relief claim to recover any tax they might have paid too much, however they require to do so within 4 years of completion of the tax year their IR35-related tax costs was paid.

As an outcome, any specialists who paid an IR35 tax costs throughout the 2019-2020 fiscal year need to send their overpayment relief claim by 5 April 2024 or run the risk of losing out.

Considering that the conclusion of the 2019-2020 tax year, there have actually been a number of high profile examples of main federal government departments who are understood to have actually fallen nasty of the IR35 guidelines and wound up paying HMRC countless pounds in overdue tax.

These consist of the Department for Work and Pensions (DWP), which needed to pay HMRC ₤ 87.9 m throughout the 2020-2021 fiscal year following the discovery of “historical mistakes” in how it examined the tax status of its specialists.

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