IR35 will remain in force for some time to come, warns OTS tax director John Whiting

IR35 Test

Contractors should not expect a fast end to IR35, and even predictions that it might be repealed or replaced in the 2011 Budget look optimistic. That’s according to an interview with John Whiting, tax director at the new Office of Tax Simplification (OTS).

Describing IR35 and the legislation surrounding it as a “ramshackle structure”, Whiting hints that quick-fixes to “streamline” IR35 may not be on the cards. Speaking to Taxation, he says: “...if we’re going to make any serious progress we should look at the whole thing. Does that mean looking at the whole subject of sole trader versus employee versus company? Yes, it possibly does.”

ContractorCalculator’s CEO, Dave Chaplin welcomes this measured approach, believing it was then Chancellor Gordon Brown’s haste to bring in IR35 that has forced contractors to endure an overly complex and unfair tax burden for more than a decade. “I’m pleased to see that the OTS seems to want to do things properly, and if that means it takes a few more months of IR35 than we’d ideally like, it’s worth it to avoid what Whiting calls a ‘sticking plaster’ solution,” he says.

Chaplin also points out that it is significant that Whiting has said: “IR35 was ... meant to ensure that those who really were employees got employment benefits, but that never happened.”

Maybe people have to accept that if we simplify to make things easier, it may make some of the edges rougher.

John Whiting, OTS tax director

As the ContractorCalculator CEO highlights: “That was part of the original draft of the legislation, but was them omitted in the final legislation. This omission was a major flaw and, without it, the entire burden of being caught by IR35 was put on the contractor. So, for 10 years we’ve had both the agency and employers not having to care about hiring disguised employees. If there had been a penalty for employers then they would make much more effort to ensure they got things right, so that contractors never got caught by IR35 and will not be unfairly caught by its successor.”

What seems clear from Whiting’s comments is that contractors must continue to take IR35 seriously and recognise that, even after its replacement is in force, the legislation will still be applied to current contracts. Plus, contractors should also not expect IR35’s replacement to lead to an easier ride from the taxman. As Whiting says: “For all the hot air it generated, there were real abuses that IR35 was meant to tackle. If it were abolished, they could come out again. Maybe people have to accept that if we simplify to make things easier, it may make some of the edges rougher.”

ContractorCalculator will continue to monitor and report on the IR35 Review being conducted by the newly Office of Tax Simplification (OTS).

Published: Monday, August 09, 2010

© 2015 All rights reserved. Reproduction in whole or in part without permission is prohibited. Please see our copyright notice. If you want to use any content you have seen on this site then please request our media pack and ask for details of our Content Licencing Service.

Inni Accounts


Readers Comments...


  
Bookmark and Share
  
     
  

Latest Site Updates

Contract market in Scotland softens further: should contractors look south for work? Contract market in Scotland softens further: should contractors look south for work?

Scotland’s contracting market softens for another month, in contrast with the wider UK. Should contractors move south to find new contracts?

ContractorCalculator: Contracting news in brief – 17/Apr/2015 ContractorCalculator: Contracting news in brief – 17/Apr/2015

News this week covers: election promises; skills shortages and rate rises; pre-election hiring; oil and gas contractors; and key UK tax dates.

Onshore Employment Intermediaries reporting rules: contractor obligations Onshore Employment Intermediaries reporting rules: contractor obligations

Contractors must supply personal data to agencies for the Onshore Employment Intermediaries reporting rules: those that subcontract are also caught.

Targeting high earning contractors and non-doms: the politics of envy rarely pay Targeting high earning contractors and non-doms: the politics of envy rarely pay

Contractors and other high earners, now including non-doms, already bear a high tax burden. Pledges to load it up further means we could all lose out.


  
  

Twitter

Follow Us On Twitter


  
     

  
  

Contractor solutions

Contractors Handbook IR35 Report - 15 Years IR35 Test Clever Accounts Accountants Checklist CFSC Left Sky
  
  

Contractor solutions

Contractor Angels

Take home over 88% from your income. 100% compliant. Calculate now!

Contractor Accountant

Free consultation, incorporation and IR35 reviews. Find out more…

InTouch Accounting

Perfect mix of technology & personal service for only £92 per month.

Clever Accounts

Complete contractor accounting service. 24/7 online access. £69 pm!

Parasol

The UK’s largest employment organisation - 0% risk, 100% compliance

NA Bedouin Group D J Colom Accountants Mortgages NewsNow
  
Caprica Accountants Contractor Insurance Life Insurance

  

The UK's leading contractor site. Independently audited traffic (ABC) – 124,827 monthly unique visitors.