TaxPersonal TaxPressure builds over draconian tax rules

Pressure builds over draconian tax rules

The government is coming under intense pressure over its draconian interpretation of the controversial tax rules IR35 and Section 660, the so-called married couples tax.

Link: Trace the IR35 saga

Members of parliament have published reports outlining freelancers’ views of IR35 in a consultation it hopes will force the government to change its approach.

The consultation, carried out by the all party parliamentary small business group, puts at the top of its list of complaints confusion over interpretation of the rules.

‘The major problem is the uncertainty surrounding the interpretation of the rules,’ said one respondent. ‘My responsibilities under the Section 660 regulations are far from clear.’

‘This has had an enormous impact on my business,’ said another person surveyed. ‘From being simple it is now very complicated. From being clear, it is now ambiguous and potentially threatening. From being predictable, it is now inconsistent and illogical.’

It is a commonly held view within the accountancy profession that Section 660 needs clarification from the government. At the start of July, Accountancy Age reported that the Inland Revenue had agreed to meet with leading figures from the profession to discuss the matter.

Accountancy Age understands that the Revenue has now provided a provisional date in early September for the meeting.

Should the government decide to clarify and simplify the rules, the moves would be widely lauded by the small business community, which argues that complex tax legislation and red tape is stifling enterprise and driving business abroad.

Andy White, founder of the freelancer lobby group Shout99, said: ‘Hopefully it will help the debate move forward on a key part of the UK economy and also demonstrate how to engage in open and transparent consultation.’

Mark Prisk, shadow financial secretary to the Treasury, said his party was concerned with the way freelancers were being ‘discriminated against’. ‘Freelancers were first hit by the IR35 legislation, which has caught out many genuine self-employed people and freelancers. We aim to end the discrimination and provide an alternative – a fair deal for freelancers.’

Representatives of all the major accountancy bodies, as well as tax experts and small business lobby groups, are expected to attend the Revenue meeting next month.

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