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Industry experts are firing a warning to clients and recruiters about a new ‘Gross Payment Model’ emerging in the sector, which is a tax avoidance loophole, masquerading as a credible payment method, when it is essentially a scam, and possibly even fraudulent.
Experts warn of off-payroll tax avoidance loophole that leaves agencies and clients exposed ..............
In April 2021, the off-payroll working legislation ("OPW"), or "IR35 reforms", rolled out to the private sector. The IR35 rules mean that if the worker is "Inside IR35", then payments made to their limited company must be treated as employment income, just like a salary. The updated rules introduced specific changes, including the Status Determination Statement ("SDS") and debt transfer provisions. Hence, the tax liability ultimately sticks with the client if the rest of the supply chain can't pay the tax bill.
As the contractor sector and beyond knows by now, on Friday September 23rd 2022, chancellor Kwasi Kwarteng made a very significant announcement about IR35
The IR35 reforms came into force in April 2021, but research from contracting authority Qdos suggests some end-client organisation's compliance strategies require urgent improvement