Taxation - Personal services U-turn on cards?

Speculation was mounting this week that the government would announce a last minute U-turn on its controversial crackdown on personal services companies in advance of tonight’s House of Lords debate on the issue.

As Accountancy Age went to press, Tories in the Lords were marshalling forces to vote down an amendment to the Welfare Reform and Pensions Bill, giving the government powers to introduce the changes.

Shadow Paymaster General Quentin Davies was optimistic business-orientated Labour peers may side with the Tories on the issue.

The crackdown is aimed at employees masquerading as self-employed businesses, but there are fears up to 60,000 legitimate companies will also be hit.

Paymaster General Dawn Primarolo came under pressure to modify the proposals at a meeting last week with representatives of business and the profession, who called for the crackdown to be better targeted.

Anne Redston, representing the Chartered Institute of Taxation, said that Primarolo seemed willing to listen to concerns. But Primarolo also warned that there was a substantial amount of tax at stake.

Redston suggested Primarolo might make some form of concession in advance of tonight’s debate in order to dampen opposition.