Treasury under fire as IR35 leaves IT consultants ready to move abroad

Allan said the previous rules had allowed employees masquerading as companies to reduce their national insurance contributions and had ‘clearly been abused’ in the past.

Reports have suggested that 40,000 (18% of total IT consultants) are poised to leave the UK. But the Treasury is not convinced the ‘threatened exodus’ will take place.

Paymaster general Dawn Primarolo has written to computer industry leaders saying the Home Office is considering a new fast-track visa for IT experts from Eastern Europe, Africa and India to counter the shortage of consultants.

Meanwhile the Treasury has said it was yet to be convinced the threatened exodus would take place.

It said the rules have ended the practice of employees leaving a company on Friday and turning up as ‘independent consultants’ the following Monday to do the same job but enjoying new tax breaks.

However, the tax change could stunt the growth of e-commerce.

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