Tory MP John Redwood has included scrapping the IR35 tax regulation in proposals designed to make Britain more competitive.

The proposal is buried at number 19 in a list of 33 ideas presented in Freeing Britain to Compete: Equipping the UK for Globalisation (PDF), a report submitted to the Shadow Cabinet this month.

More widely publicised at the time the report was published was the second proposal on the list to repeal the Data Protection Act.

IR35 came into affect in April 2000. Broadly, it states that contractors working for one client only, especially on the client's premises using the client's equipment, are in full time employment and should pay income tax and National Insurance contributions accordingly.

The legislation also states that the client should pay employer's National Insurance contributions.

The regulation was designed to close an obvious loophole whereby contractors could avoid PAYE and their clients could avoid employer's National Insurance contributions.

Redwood said in an interview with Contractor Calculator that IR35 is "simply a burden on contractors doing business".

The Conservative Party has said that the proposals have not yet been evaluated fully and may or may not be adopted as policy in the next manifesto.