The Making Tax Digital (MTD) scheme that was widely unpopular was omitted from the 2017 Finance Bill. The bill was shorter than that originally proposed.
By removing the MTD from the bill, the government appears to be accepting as valid the concerns that some people had that with a snap election there was too little time to properly scrutinize the details of the MTD.
However, whilst contractors might be happy about the exclusion of MTD this will be tempered by the fact that IR35 reforms have been included in the bill.
Not only were the reforms included in the bill they were also amended shortly before being included which could have chaotic consequences for parties who have already made payments or been paid under them.
Bauer & Cottrell an IR35 advisory was the first to flag up the amendment. They said that “public authority” has been revised so that private sector retail companies that serve the NHS such as pharmacies are out of scope.
The government has said that without this change such companies (which includes opticians) would have had to decide if the off-payroll rules apply to contractors working for them via a PSC or limited company. Significantly, these changes will apply retrospectively.
Kate Cottrell, the co-founder of Bauer & Cottrell said, “How are they [affected parties] going to deal with payments already made?”
“It is shocking that we are three whole weeks into the new IR36 rules for the public sector to find that HMRC have only just grasped how wide-ranging the rules are and the unintended consequences of this policy.”