New Coalition Government to replace IR35
09 June 2010
The fourth priority in the new government’s 20-point plan is to review the unpopular IR35 law as part of a “wholesale review” of small business taxation. This review will seek to replace IR35 with “simpler measures”.
John Brazier, Managing Director of The Professional Contractors Group (PCG), which campaigns for fair taxation said of this decision:“We are delighted that the new coalition government made this commitment to review IR35 as a priority only days after taking power.”
The resulting measures of the review will “prevent tax avoidance but do not place undue administrative burdens or uncertainty on the self-employed, or restrict labour market flexibility.”
IR35 legislation was originally introduced on April 6, 2000, after having been proposed in the 1999 Budget, with the aim being “to eliminate the avoidance of tax and National Insurance Contributions through the use of intermediaries, such as Personal Service Companies or partnerships, in circumstances where an individual worker would otherwise, for tax purposes, be regarded as an employee of the client”.
Brazier added, when outlining the unfairness and effect of IR35 on freelancers, “It has caused great heartache to many people. The cost in distress has been high, but the revenue for HMRC has been minimal.”
Chairman of PCG, Chris Bryce, adds:“Freelancing is a growing and valuable part of the UK economy. We are delighted that at last we have a government that appreciates this.”
Filed under: coalition, freelancers, IR35, tax