Contractors warned about new windup rules
Posted 15th February 2018 in For Businesses For Workers
Contractors are being reminded about new tax return rules concerning winding up that will come into force this year.
The changes mean any contractors will be impacted by a distribution on winding up on or after April 6th 2016.
It is hoped the rules will prevent people reducing their tax liability by converting what could be received as a dividend into a capital payment.
A statement from the Association of Taxation Technicians (ATT), said: “Deciding whether the rules apply is complicated by the subjective nature of the conditions, the lack of any clearance facility and the limited practical examples in HMRC’s guidance.
“It is unclear whether if a taxpayer genuinely believes that they do not apply, but HMRC concludes they do, penalties will be imposed.
“We have written to HMRC asking for further guidance on the application of the rules, including how HMRC will apply penalties if they consider an error has been made in a tax return.”
Contractors are being advised to seek advice if they are unclear on how to correctly complete their self-assessment return.