Rivals unite in tax fight

In an unprecedented show of solidarity, rival UK professional bodies are this week launching a joint protest at the government’s impending crackdown on tax avoidance by personal services companies.

The English ICA, the Chartered Institute of Taxation, the Law Society and the Confederation of British Industry are sending a jointly signed letter to Paymaster General Dawn Primarolo expressing serious concerns and calling for a detailed consultation on the proposed measures.

The Inland Revenue argues the crackdown, announced in the Budget, targets those who exploit corporate tax and National Insurance advantages by switching from working as employees to working as independent consultants.

But accountancy and tax bodies fear the crackdown on so-called personal services companies will cast too wide a net and hit those in legitimate business structures.

These concerns have grown with the circulation of a confidential discussion document detailing the proposed rules, which the government hopes to introduce next April.

Experts argue the rules are so widely drawn that they could even hit partners of accountancy firms.

ACCA tax technical officer Chas Roy-Chowdhury said the proposed rules ‘could mean that partners of accounting firms, law firms, those working in the film industry and freelancers will be affected’.

IT and engineering consultants have been among the most vociferous opponents of the moves, arguing they could result in a ‘brain drain’ of up to 30,000 much-needed specialists from the UK.

KPMG this week warned the rules would ensnare non-executive directors.

Leader, page 12; Analysis, page 8.

Related reading