TaxAdministrationScrap ‘crippling’ contractor tax

Scrap ‘crippling’ contractor tax

iR35 stifles business and is useless as a tax-raising tool – Whitehall should scrap it

Ten years on and the largest single impediment to freelance working in the
UK, the Intermediaries Legislation (IR35) is still in force, creating massive
and crippling uncertainty for freelances who are required to self-assess their
tax liability with unclear and unfair rules.

What’s more, there is no evidence that this unworkable legislation raises any
revenue for the Exchequer; instead, it limits flexibility within labour market.
At the Professional Contractors Group, we have appealed to Alistair Darling once
again in the run-up to this year’s Budget to abolish IR35 and not to let the
‘tax tail’ wag the ‘business dog’. Has he listened?

The Liberal Democrats’ small business spokesperson, Lorely Burt MP, is on our
side – she raised an Early Day Motion to abolish IR35 and we are grateful to her
for highlighting the issue to the House of Commons.

We would now like to see more MPs from other political parties supporting the
motion and sending a clear signal to government that it must act now,
acknowledge the damage that IR35 has done, and abolish it.

The Professional Contractors Group believes that all workers should have the
right to be self-employed and to work on a freelance basis, if they wish to, and
when it is commercially appropriate.

A combination of factors, including confused common law and bad practice by
some companies, means that this right is not always available or
straightforward.

Freelance contractors and the self-employed should not be forced into
employee status or quasi-employee status by the government, clients or anyone
else. End-users must therefore engage workers appropriately, either by an
employment contract or a commercial contract, depending on the nature of the
work they are undertaking.

Employment and tax status should ideally be indivisible: where work should be
done by an employee, the worker should be engaged as an employee and given the
appropriate rights; where work can be carried out on a commercial basis, the
enterprise should be taxed as such, and neither expect employment rights and
protections nor have them foisted upon it.

We would like to see an independent review of small business taxation in the
UK immediately because there is serious unhappiness with the current
arrangements which can be seen at every level, from the government itself to
small businesses, their accountants and other advisors. Chancellor – are you
listening?

John Brazier, managing director, the
Professional
Contractors Group

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