Latest: Ministers make IR35 concessions

The government has made concessions in its overhaul of the tax system for personal services companies, but accountants have warned that contractors will only be marginally better off. Today’s move is designed to placate critics of the measures announced in the Budget. The government has withdrawn its previously announced certification scheme and control test. The original measures were designed to prevent people taking advantage of contractors’ tax status when they were to all intents and purposes employed by one company. But critics said the catch-all approach would hurt genuine contractors. However, today’s changes to the now-famous IR35 rules say those who are genuinely carrying on a business should escape. Ernst & Young tax partner Anne Redston said many people would still be caught by the revised rules and they would have to pay extra tax and NIC. Those most affected would be contractors acting as employees of their clients. But overall she welcomed the move. ‘The burdens on business have been significantly reduced and the proposals are much fairer than was orginally proposed,’ she said.