PAYE liability of employer reduced if mistake applying rules has been made

The government has said it is tweaking the IR35 rules in documents published alongside today’s autumn statement.

Chancellor Jeremy Hunt junked his predecessor’s plans to reform IR35 last year after Kwasi Kwarteng said in last September’s mini-Budget the off-payroll tax rules would be ditched in April this year.

The introduction of IR35 in April 2021, delayed by a year because of the pandemic, was met with concern in the construction sector, which is heavily reliant on freelancers to provide technical expertise both on and off-site.


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The IR35 rules were introduced in April 2021

In documents published by the Treasury today, a note on IR35 says: “The government will legislate in the Autumn Finance Bill 2023 to allow HMRC to reduce the PAYE liability of a deemed employer to account for taxes paid by a worker and their intermediary on payments received where an error has been made in applying the off-payroll working rules.”

Kwarteng has said scrapping controversial reforms to the tax status of self-employed workers would free up time and money for businesses.