Who’d have thought that under a ConDem administration we would see even greater coverage of the IR35 debate, rather than it being strangled quietly and buried in an unmarked grave at midnight? This week we’ve twice seen government pledges to deal with IR35 – once in the budget document and a second time in the interview Small Business Minister Mark Prisk gave the Daily Telegraph, in which he made it clear that IR35 will be abolished.
Cause for a joyful blast of vuvuzelas? Well, hang on a moment. Because, as reported on AccountingWeb the following day, the Treasury effectively issued a retraction:
“The budget makes it clear the government is committed to reviewing IR35 as part of a wider review of small business tax. Details will be released in due course but, as the coalition agreement sets out, the government will review the case for replacing IR35 ‘with simpler measures that prevent tax avoidance but do not place undue administrative burdens or uncertainty on the self-employed, or restrict labour market flexibility.’” [Source: AccountingWeb]
The plot thickens and the story is beginning to mirror that of England’s World Cup squad. A lack of clear leadership, inconsistent messages, loss of focus, poor application and dissention among the team all leading to a bad performance. Sound familiar?
What we must not forget is that the official line from government has been that IR35 will be reviewed and possibly replaced, but not abolished. However, many in the contracting sector are interpreting the government line as meaning that IR35 will be killed off and not replaced, and that this will happen sooner, rather than later.
So, the one thing that seems certain is that, if the current coalition government survives, IR35 will be ‘reviewed’. So let’s not get over-excited by seeing an IR35 ‘review’ as the penalty that will win contractors the match against HMRC and unfair taxation. And we should also face the fact that neither the government, Treasury nor HMRC are going to open the door to tax avoidance by removing the IR35 legislation completely. At best, they are likely to change its name and tinker with how it is applied.
A renamed IR35 squad that is shown consistent leadership from ‘the management’, that is given a re-brand, receives a legislative tightening-up, and in which all the players get the training and tools they need to ensure they are at the top of their game is a frightening prospect. It is likely to be unleashed back into the competition to win as much tax revenue from contractors as possible.
Leadership, direction and focus, and the promise of a big fat payout for every victory, makes for a winning combination.
You think it’s all over? A fitter, leaner, more focused IR35 squad with new legislation has the potential to score a whole load more goals against contractors.
Good Luck for Sunday, England! Good luck for fair taxation, contractors!