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18 October 2016

IR35 dispute prompts mass walkout of IT contractors from MoD agency

Several major IT projects at a Ministry of Defence (MoD) agency are on hold after a mass walkout of IT contractors in a dispute about their tax status, Computer Weekly has learned. Around 30 out of a possible 32 IT contractors are understood to have deserted the UK Hydrographic Office (UKHO) since the end of August 2016, with the remaining workers left to prioritise dealing with day-to-day tech support issues, it is claimed. The organisation is responsible for the collection and supply of hydrographic and geospatial data to the Royal Navy and merchant shipping industry. The dispute centres around whether contractors are eligible to be taxed under controversial rules known as IR35. Freelancers using IR35 are treated as off-payroll, and are typically employed by a limited company of which they are a director – and as such, avoid PAYE tax on their contracted earnings. However, HM Revenue & Customs (HMRC) wants to clamp down on contractors abusing the system by making public sector bodies treat them as salaried workers unless they ...

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