Repeal unlikely as IR35 suits Government's cost-cutting plans

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Repeal unlikely as IR35 suits Government's cost-cutting plans

Posted Dec 6, 2009

Leading tax expert, Nichola Ross Martin, notes that IR35 might suit the Government rather well, and that the chances of the intermediaries legislation being repealed in the Pre-Budget Report are therefore slim.

In an interesting article published last month, Ross Martin notes the recent calls to repeal IR35 from various organisations and individuals. The PCG, of course, have been vocal about the inequity of IR35 since its inception, and IR35 expert Anne Redston recently pointed out that it is unfair to subject small companies to such rules as they serve only to stifle entrepreneurs.

However, the article suggests that IR35 actually suits the Government very well, especially at a time when it is calling on its departments to make cuts and other efficiency savings. The MoD and NHS are both very reliant on contractors, many of whom work via umbrella companies. HMRC, likewise, uses large numbers of IT contractors - working via limited and umbrella companies.

"So, why would the government wish to abolish IR35 and repeal tax-employment law? There is no logical benefit: it stands only to increase its own costs, which are of course, our costs by 12.8%, and no one would want that, would they?"

You can read the article here.

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