Advisers fear repeat of IR35 controversy

Advisers are bracing themselves for ‘a new IR35’, after the government darkly
hinted in last week’s Budget that it planned to move on composite companies.

In a clause in the Budget

documents, the tax authorities said there was ‘evidence of agencies,
contractors and employers requiring workers to use corporate

structures… thereby avoiding paying tax and national insurance


The Treasury said that it would consult on moves to tackle the problem. The
suggestions are a throwback to the controversies of IR35. The move hit many
small IT contractors simultaneously, causing some of the most heated tax rows in
recent years.

Francesca Lagerberg, national tax director of Smith & Williamson, said
such composite companies replicate the features of those service companies on a
larger scale, and could be caught by IR35.

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