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Ambiguous IR35 Budget statement causes industry excitement
Posted Mar 21, 2012
The final part of the short Budget 2012 statement afforded to IR35 has created further uncertainty for contractors, according to some industry experts.
Although the current IR35 rules remain firmly in place following Budget 2012, the official Budget document states that the Government intends to put in place various measures to administer IR35 better.
The final part states; "subject to consultation, requiring office holders/controlling persons who are integral to the running of an organisation to have PAYE and NICs deducted at source by the organisation by which they are engaged. (Finance Bill 2013)."
Unfortunately, it is not clear which individuals the Government is referring to - the batch of highly ranking public officials who have been recently 'outed' for using limited companies instead of being PAYE employees - or a wider group of taxpayers.
John Brazier, MD of PCG, said that his organisation was seeking "urgent clarification" over the statement:
"These plans appear ambiguous and may affect senior interims and it is crucial that these legitimate businesses do not suffer as a consequence."
Stuart Davis, chairman of the FCSA, said that his organisation was concerned about the statement:
"We believe this is the Government's attempt to try to prevent senior civil servants from legitimately working as freelancers and contractors as recently highlighted in the media. The Government plan to consult on their plans which is welcome but already we believe this demonstrates once again how the Government have a complete lack of understanding of the flexible workforce."
Martin Hesketh, MD of Brookson Accountancy, was also surprised by the statement, which he says is "clearly a political knee-jerk reaction and flies in the face of the principles brought in with IR35."
We will update Contract Eye will further industry reaction to the Budget over the coming days.
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