How IR35 & tax offsets work
Dave Chaplin, CEO of IR35 Shield, explains how tax offsets can reduce the financial risk of incorrect IR35 determinations. Learn how recent case law changes HMRC’s approach, why double taxation concerns are easing, and what this means for confidently engaging contractors under the off-payroll rules.
This webinar, "IR35 & Tax Offsets – How they work," presented by IR35 Shield CEO Dave Chaplin, provides a crucial explanation of how tax offsets can significantly reduce the financial impact of incorrect IR35 (Off-Payroll Working) determinations. The session clarifies a long-standing issue where HMRC’s historical approach to collecting underpaid taxes from the fee-payer or client did not adequately account for taxes already paid by the contractor, leading to effective double taxation.
Dave Chaplin delves into the legal background of the tax offset mechanism, particularly referencing the crucial Court of Appeal ruling in the Atholl House case that clarified how prior tax and National Insurance Contributions (NICs) paid by the contractor should be offset against any deemed employer liability.
The webinar highlights the significant benefits of this clarification for businesses, removing a major barrier that led many to implement blanket bans on contractors due to disproportionate perceived tax risks. With proper offsets, the actual additional tax liability for an "inside IR35" engagement is primarily limited to Employer’s National Insurance, potentially transforming the landscape for contractor engagements.
This insight is vital for firms looking to review and adjust their contractor engagement policies, allowing them to access high-end talent more confidently while ensuring robust IR35 compliance.
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