On 20th July 2010, the newly formed Office of Tax Simplification announced that reviewing the IR35 tax legislation
would be a top priority. Any simplification of IR35 will need to provide an alternative regime to tackle
the tax avoidance IR35 was originally set up to tackle. Quick fixes to streamline IR35 are unlikely.
The Agency Workers Directive is an attempt by the European Commission in Brussels to impose the same rules on all contractors and
temp workers all over Europe, and these rules mean that contractors would be treated like employees, required to received
holiday pay, sick pay, etc.--all the costly benefits employees get. The Directive has not yet been implemented,
but it will be, and its implications may become almost as important to some contractors as IR35 legislation is.
On 9th October 2007 the Chancellor announced in his Pre Budget Report that measures would be introduced for 2008-2009 to
tackle tax avoidance by 'income shifting.' These have since been delayed, but are expected in the PBR in Nov 2008.
These measures are in the wake of the loss of the Arctic Systems (known as 'Section 660a') case by HMRC in 2008. The Revenue tried
to attack the tax savings available by married couples who split shares in their company, and subsequent
dividends - thus taking full advantage of the tax allowances of both partners.
This section explains the background to the proposals, and will provide updates and guidance going forward.
In June 2007 The Lords select committe called for a radical change to the UK tax system for contractors, highlighting that
the current system is overly complex. This section contains special reports regarding this issue, with comment
from the UK's leading experts, providing a balanced view of the way forward for contractor taxation.
