TaxPersonal TaxLetters – IR35 should be abolished.

Letters - IR35 should be abolished.

In your coverage of the Conservative pledge to repeal IR35 (Tories axe IR35, page 3, 22 February), you report that chief secretary to the Treasury Andrew Smith MP said IR35 raised #900m last year.

It is hard to see how this can be the case, since payments under IR35 are not due until April 19. Can Smith tell us how he obtained such a figure, or is it pure fiction?

It is most unlikely that IR35 will raise anything like the amount the government estimates. Indeed it is likely to reduce tax revenues, as contractors react to the new climate of uncertainty.

Many contractors are refusing to take contracts that risk falling under the new rules. This means they are turning down contracts, taking longer to find and negotiate new ones and hence spending longer out of work.

This means paying tax on a smaller turnover at the old rates. Add to that the many thousands who have left the UK entirely and whose taxes are going into the coffers of other countries.

Trying to impose punitive taxation on a mobile workforce whose skills are in global demand will reduce tax revenues, not increase them.

The Conservatives are to be congratulated for striking a blow for small businesses.

Gareth Williams, chairman, Professional Contractors Group.

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