IR35 Factors, IR35 Compliance, are you caught?

12/5/2010 - Read our latest piece on the Lib Dem / Conservative coalition's potential views on IR35.

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A Liberal Democrat MP has raised an Early Day Motion (EDM) calling for the removal of barriers to business in light of the economic downturn and to abolish IR35 as soon as possible.

Just weeks after the tenth anniversary of IR35's first appearance in an HMRC press release, Lorely Burt MP has called for the removal of IR35 at "the earliest opportunity".

Early Day Motion

The EDM (No. 1124), raised on 18th March 2009, states:

"That this House notes with concern the 10 year anniversary of the Government's implementation of IR35; further notes that the 1.4 million freelancers in the United Kingdom face a perpetual threat of a costly and distressing HM Revenue and Customs investigation under IR35; further notes that IR35 obliges freelancers to spend time and money assessing their status as best they can, with contract reviews, tax investigation insurances and negotiations with clients and agencies, and that this effort would be better spent generating wealth for the UK economy; highlights concerns expressed by the Professional Contractors Group (PCG) that 1,462 of the 1,468 cases known to PCG have resulted in no extra tax being owed; further notes that there is no evidence that IR35 is raising any money for the Exchequer; and calls on the Treasury, in light of the current economic difficulties, to remove unnecessary barriers to enterprise and to abolish IR35 at the earliest opportunity."

At the time of writing, the EDM had secured 15 signatures, including that of Vincent Cable, who has been widely praised for his insights into the state of the economy.

John Brazier, MD of the PCG, said: "We are grateful to Lorely Burt MP for highlighting the issue to the House. I would urge more MPs across all parties to support the Motion to send a clear signal to Government that it must act now, acknowledge just how damaging IR35 is to freelancers and the UK economy and abolish it."

In reality, given the Government's complete refusal to manoeuvre on IR35 througout the last decade, we may have to wait until after the next General Election for any real action to be taken on the tax measures.

What is IR35?

For more information, you can read our history of IR35 and a brief guide to IR35