The latest IT Contractor News from Contract Eye

The PCG has called for a overhaul of current tax legislation following revelations that cabinet ministers have reclaimed the costs of professional help with their personal tax affairs.

One rule for them...

The Professional Contractors Group, who only last week revealed that IR35 raised only £1.5m per year for the Treasury, has pointed out that many contractors and freelancers have to shell out for professional help with their self assessment tax returns. However, unlike some cabinet ministers, HMRC insists on treating such costs as 'private' and won't allow them to be submitted as tax-deductible expenses.

John Brazier, MD of the freelancers' association, said:

"A normal taxpayer completing the self-assessment form has to be not just accurate, but able to prove with hard evidence that they are paying the right amount of tax. Failure to do so can have very serious consequences. For the freelance contractor there is a significant cost in making sure the self assessment return complies with the raft of tax legislation which constrains small businesses and subjects the employment status of the individual freelancer to obscure and ambiguous rulings.

"This is frankly galling. Tax rules prevent most people from claiming the cost of employing an accountant to handle their self assessment return. There seems to be one rule for cabinet ministers but another for the rest of us. This is morally indefensible!"

Tax overhaul required

Brazier continued to call for a complete overhaul of the current tax system, as small businesses bear a heavy burden for the existence of a complicated tax regime. Freelance contractors in particular seem to have been singled out for 'special treatment' over the past decade, thanks to IR35 and other measures such as the income shifting proposals.