HMRC has launched a consultation that will run until June, focusing on the risks of double taxation in the IR35 system.

Current legislation could change to offset tax payments by contractors who are accidentally charged as if they were sole traders.

At the moment, IR35 does not allow HMRC to set off any tax payments already made by contractors and their intermediaries, meaning businesses can be charged twice.

HMRC also does not factor in any tax already paid by the intermediary during the start of a contractor's engagement.

If agreed, the changes will allow HMRC to investigate and offset any tax payments if the contractor or their personal services company has already been charged due to an incorrect IR35 classification.

Dave Chaplin, CEO of IR35 Shield, said:

"Whilst this is labelled a consultation, the speed and narrow focus of the single solution reads like an announcement. The short consultation window of only eight weeks, followed by a response later this year, is a clear signal that the fix will be happening in the next Finance Bill 2024."

The consultation will invite comments until 22 June 2023, with any changes to the IR35 legislation expected to come into effect from 6 April 2024.

Talk to us about your IR35 status.