PCG lobbying gains contractors Tory commitment to “review” IR35

IR35 Test

Contractors may no longer have to trade in constant fear of their employment and tax status being challenged under IR35 legislation, if the Conservative Party win the next election later this year. That’s because the Tories have committed themselves to a review of IR35. However, this falls short of a Conservative commitment to scrap IR35 and introduce tax legislation that avoids penalising contractors for their enterprise.

In a letter to PCG in response to its lobbying efforts on behalf of contractors, Shadow Business Minister and Tory MP Mark Prisk has said that, if it wins the next election: “a Conservative Government would undertake a fundamental review of small business taxation matters, including IR35.”

“This commitment is the result of sustained lobbying by our strengthened policy team,” PCG Managing Director John Brazier told ContractorCalculator. “We are talking to politicians who have actual experience of running a small business and this gives us the sense that we are pushing the water downhill at last!”

A Conservative Government would undertake a fundamental review of small business taxation matters, including IR35

Mark Prisk MP, Shadow Business Minister

‘Recognise and value’ the flexible workforce

Brazier says that PCG has been lobbying all the main parties and has clear expectations that the Conservative Party, if it were to win an outright victory, would be the party to champion and free-up enterprise.

“We have supplied the Conservative business and Treasury team with a considerable body of evidence, including a range of new economic forecasts,” continues Brazier. “We’ve also emphasised the need to release the flexible economy from its current legislative and tax burdens, allowing contractors and freelancers to flourish.”

Clearly, PCG’s education programme has met with success, as Prisk goes on to say in his letter that “...we recognise and value the contribution of freelancers and we are well aware of the way in which the current Government has treated them. We want to deal with this problem comprehensively, in a way which provides us all with a lasting solution, not a short-term fix.”

We are talking to politicians who have actual experience of running a small business and this gives us the sense that we are pushing the water downhill at last!

John Brazier, Managing Director, PCG

Any changes must be revenue neutral

Tory plans for an Office of Tax Simplification were originally proposed in 2008 and met with a mixed response from business groups and taxation professionals.

Whilst generally welcoming proposals to amend IR35 and business taxation, Brazier emphasises that any changes to taxation must be both realistic and revenue neutral.

“In the current economic climate, no government will implement changes to the tax system that will result in a loss of tax revenues. So clearly, any review of IR35 must be revenue neutral,” says Brazier. “Our discussions with the Conservatives to date have covered a raft of issues and focused on fairness for flexible workers, particularly limited company contractors, to be treated like any other small business.”

Brazier adds that: "...it’s our belief that IR35 would not simply be replaced in this greater review", but he confirms that it is PCG’s intention to ensure that the particular circumstances of freelancers and contractors are understood by the tax professionals responsible for any future business taxation review.

“We are delighted with this commitment from the Conservative Party to review IR35 as part of a general review of small business taxation,” comments Brazier. “PCG, however, will not be complacent and we will continue to make the strongest possible representations on behalf of freelancers and contractors to any Government of whatever colour after the election.”


Alliance Accountants

Published: Wednesday, March 31, 2010

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