Lords hearing reveals IR35 schism

by Calum Fuller

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17 Dec 2013

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A SCHISM OVER THE OPERATION of IR35 emerged during a House of Lords Personal Service Companies Committee hearing.

The legislation, designed to prevent people engaged through personal service companies (PSCs) from taking home more money than they would if they were directly employed, has been the source of various controversies in recent years.

There was public and political anger after it was revealed 2,000 senior office holders of public bodies were revealed to be receiving payment off-payroll, while the BBC revealed in September that 148 of its 467 presenters were engaged in the same fashion.

The committee, chaired by Baroness Noakes, heard the rule is "unwieldy" and "incredibly tough to comply with".

"Our members always have problems understanding IR35," the Federation of Small Businesses' David Ramsden said. "IR35 is a sledgehammer to crack a nut and you only get around it by spending money".

However, Brookson Accountants' managing director Martin Hesketh claimed the legislation is adequate, instead calling for greater education and enforcement of the rule.
"Nobody's come up with a better answer. I would leave it alone", he said.

He added HM Revenue & Customs ought to be braver in flagging up good practice and poor practice in IR35 matters. He said that the taxman may harbour an "understandable concern" over creating a competitive advantage or disadvantage to organisations.

"The consequence is they never quite condemn the bad stuff openly and publicly", he said.

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