TaxPersonal TaxMontagu hits out over IR35 story

Montagu hits out over IR35 story

Inland Revenue chief Nick Montagu has hit back at claims that there is uncertainty surrounding the government's position on IR35.

In an open letter to a Daily Mail journalist, Montagu says: ‘The High Court has confirmed unequivocally that it [IR35] is valid in law, and people must now comply with the obligations which it imposes.’

The first payments under IR35 are due today and fears have grown during the week that many contractors have ‘stuck their heads in the sand’ after becoming convinced they were not subject to the controversial tax measure.

Efforts by the Professional Contractors Group to overturn IR35 in the High Court ended in failure two weeks ago when a judge said he could not rule that the legislation contravened the Human Rights Act.

Despite bitter disappointment, campaigners believed criticism in the ruling would lead to new guidance from the Inland Revenue.

However, Montagu today insisted IR35 stands and no new guidance is to be issued.

‘The basic tests for determining whether someone is employed or self-employed for tax and national insurance purposes remain unchanged. Everyone affected by IR35 needs to work out how much tax and national insurance they owe us and pay it by 19 April,’ he said in the letter.

He did, however, indicate that the guidance could be adjusted in future.

‘We will be looking at whether we need to improve the guidance which we give the public and our own people, in the light of the judge’s remarks,’ he said.

The English ICA’s Tax Faculty earlier this week urged contractors to calculate and pay any tax due by the deadline date to avoid penalties and interest. Although interest charges will still apply, Revenue officials have agreed to accept estimated figures without imposing penalties.

And in statement today it expressed disappointment that the Revenue had not made a firm commitment to review this guidance as soon as possible. It added that it thought the Revenue was over-reacting to press comment.

Links

Tax Faculty: IR35 rises to bait

Inland Revenue letter

IR35 resource centre

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