An IR35 review will be a priority of the new Office of Tax Simplification (OTS), announced by the Treasury today. In time for the 2011 Budget, the OTS must report to Chancellor George Osborne about:
- Which elements of the current tax system cause the most confusion for small businesses
- Priority areas for simplification
- The impact of any simplification measures.
The Treasury says that the OTS has been established as an independent Office of the Treasury, and will draw together expertise from across the tax and legal professions, the business community and other interested parties. It is expected that this should include representation for contractors.
Specifically, one of the priority tasks for the OTD will be to review IR35, provide evidence that the legislation is complex with uncertain outcomes, consider alternatives and look at issues relating to tax avoidance. Naturally, any simplification will need to provide an alternative regime to tackle the tax avoidance IR35 was originally set up to tackle.
The IR35 review is part of the wider review of taxation promised by the coalition government. Chancellor George Osborne says it “... will provide important expert advice that will help inform us in making the right reforms that will make the UK a more competitive place to do business, while freeing people from the unnecessary legacies built into our tax system over the last 10 years.”