Contractors have been informed that IR35 is ‘dead on its perch’ by PCG’s Simon McVicker, in a blog that compares the review of IR35 with the iconic ‘Dead Parrot’ sketch by Monty Python.
However, ContractorCalculator’s CEO Dave Chaplin says contractors must continue to take precautions as they have until now, because IR35 remains in force and being enforced by HMRC. “The coalition government’s attitude to tax avoidance is firm, and so is HMRC’s need to raise funds for the exchequer, so contractors should not be in any doubt that their compliance with IR35 is essential,” he says.
Flexible skilled workers benefit UK PLC
Chaplin believes that PCG’s efforts have been hugely effective in alerting the new administration to the damage IR35 is causing to the flexible workforce, but even if it’s ‘dead on it’s perch’, the tax law remains in force and contractors are still at risk.
“We’ve finally got an administration that acknowledges the unfairness of the current tax legislation regarding highly skilled flexible workers,” says Chaplin. “But IR35 is still in force and is set to remain so until at least the next budget in April 2011.”
Contractors remain at risk
HMRC is struggling to maintain its performance. According to the latest accounts published by the National Audit Office, HMRC has 18m unresolved enquires regarding over/under payments in tax and National Insurance Contributions (NICs).
We've finally got an administration that acknowledges the unfairness of the current tax legislation regarding highly skilled flexible workers
Dave Chaplin, ContractorCalculator
But HMRC has traditionally viewed contractors as ‘high yield’ targets, meaning that IR35 investigations are still a very real risk for contractors. So prudent contractors must continue to implement IR35 risk mitigation strategies, even if the Norwegian Blue is to be no more in future.
Dave Chaplin is a former IT contractor in the City of London, and is founder and CEO of ContractorCalculator, and author of the Contractors' Handbook.
Started in 1999, ContractorCalculator (this site) is the leading independent website for the UK contracting industry – most of whom are highly skilled knowledge workers.
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ContractorCalculator will continue to monitor and report on the IR35 Review being conducted by the newly Office of Tax Simplification (OTS).
Published: Monday, August 02, 2010
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