Contractors welcome Early Day Motion calling for IR35 to be abolished

Contractor Tax Protection
Tax Liability Cover (TLC35) and
IR35 insurance from Qdos Consulting

Contractors welcome Early Day Motion calling for IR35 to be abolished

Posted Mar 23, 2009

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

------------

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

All content ©Contract Eye Ltd. Protected by Copyscape. Please scroll down for related articles.

Contractor Services

Professional Indemnity Insurance - Essential cover from Hiscox
The fair umbrella company - take home more pay with paraplus
InTouch Contractor Accounting - specialist online service & great advice
Parasol - the UK's favourite umbrella company
Contract Experts - ClearSky Accounting on 08000 325 326
Helix Management Ltd - Up to 90% retention. Same day payments.
Umbrella Company - 12,000 contractors can't be wrong!
Together we're stronger! - Join PCG, representing contractors
Cloud 9 Group - Umbrella Solutions only £27.50 per week
Qdos - IR35 experts - Providers of low cost contractor insurance
K & B Accountancy Group - Fixed fee contractor accounting only £75pm
Free IR35 & Tax Review - Call ICS on 0800 195 3750
Contractor Mortgages - the best deals, based on your contract rate alone!

Would student loan boss have been caught by IR35?
Following news that the Student Loans Company boss has been receiving remuneration via his own personal services company, we ask whether this would this have made him a classic target for an IR35 investigation.

Does IR35 apply to sole traders?
Although the Intermediaries Legislation was created to target alleged disguised employment by limited company directors, how are sole traders affected by IR35?

Tax Tribunal hearing deems contractor to be part-caught by IR35
John Spencer, a retired IT specialist, experienced mixed emotions at a recent First Tier Tax Tribunal hearing, where a long-term engagement was deemed to be only partially subject to the IR35 rules.

IR35 Forum - HMRC proposals to target higher risk IR35 targets
The latest IR35 Forum minutes show that advances have been made over how HMRC proposes to more accurately identify IR35 targets in the future.

IR35 raises millions each year from self-certifying contractors
A new Freedom of Information Request reveals that significant sums of tax have been raised from contractors who self certify themselves as being caught by IR35.

Fewer HMRC IR35 status enquiries, but tax yield per case soars
HMRC has released further data showing that the number of IR35 status enquiries has dropped dramatically since the early 2000's, but the tax raised per enquiry in more recent years has increased greatly.

IR35 Forum - HMRC seeks further industry help in improving IR35 administration
The latest IR35 Forum minutes show that HMRC is seeking further feedback from industry stakeholders to help improve the way IR35 is currently administered.

IR35: is it possible to balance the interests of contractors and HMRC?
Marc Morris from 1st Option looks at HMRC's conflict between maximising its tax yield, and encouraging the development of a flexible workforce in the UK.

Startling drop in tax yield from IR35 status enquiries
Data released by HMRC shows that the number of IR35 status reviews has shrunk massively in recent years, as has the amount of tax yielded as a result of such enquiries.

Lib Dem policy paper calls for IR35 to be suspended
A new Liberal Democrat IT policy paper, to be debated at the forthcoming party conference, has called for IR35 to be suspended.

Forum discusses IR35 helpline and HMRC compliance measures
The minutes of the second IR35 Forum meeting have been published, and covered areas such as the IR35 helpline, and how HMRC's compliance units intend to operate in the future.

Supreme Court confirms Autoclenz ruling over sham employment contracts
The UK Supreme Court has upheld an earlier ruling by the Court of Appeal that contract wording cannot determine the employment status of workers, if it doesn't reflect the reality of the working arrangements.

HMRC targeting under further scrutiny following Primary Path Ltd IR35 victory
A tax tribunal has found another contractor to be in business on his own account following an eight year IR35 challenge by HMRC.

HMRC suffers another IR35 defeat - engineering contractor not an employee
In an IR35 defeat for HMRC, a tax tribunal failed to find any evidence that a contract of employment existed between an engineering contractor and his client.

Why was IR35 introduced in the first place?
We look at why the Intermediaries Legislation was created, who it is aimed at, and the problems that complying with IR35 has caused contractors since 2000.