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IR35 Review by OTS

On 20th July 2010, the newly formed Office of Tax Simplification announced that reviewing the IR35 tax legislation would be a top priority.

In time for the 2011 Budget, the OTS must report to the Chancellor about which elements of the current tax system cause the most confusion for small businesses, priority areas for simplification, and the impact of any simplification measures.

Any simplification of IR35 will need to provide an alternative regime to tackle the tax avoidance IR35 was originally set up to tackle. John Whiting, tax director at the new Office of Tax Simplification (OTS) has hinted that quick fixes to streamline IR35 are unlikely.


About the IR35 review

Contracting sector could benefit from IR35 review by new Office of Tax Simplification
Contractors could benefit as the Treasury announces the creation of the Office of Tax Simplification, charged with tackling the unfairness of IR35.

IR35 may be repealed or replaced, but the old rules will apply to previous contracts
Whatever happens, it will still apply to contracts completed in the years the legislation was in force, warns Qdos’ Andy Vessey.

Background to IR35

What is IR35? Does it apply to your contract?
It is tax avoidance legislation designed to ensure workers using an intermediary but who are ‘disguised employees’ pay the correct amount of tax.

IR35 history & overview
A timeline and oveview of the legislation since it was introduced in April 2000.

IR35 Rules: How to determine if your contract passes - 10 essential points
Signing a contract without checking whether it passes is taking a huge risk. Here’s what to look for before signing the contract.

How to prove IR35 does not apply to you
Want to prove IR35 does not apply to you? Learn the evidence to collect during a contract that will bat away the taxman.

Why contractors caught by IR35 cannot necessarily claim employment rights
Roger Sinclair of Egos dashes the hopes of contractors caught by it claiming employment rights from their clients.

IR35 - Top 10 traps to catch the unwary contractor
HMRC is always on the lookout for contractors who put themselves inside it by making easily avoidable mistakes. Here are the top ten traps to avoid.

IR35 potential changes

IR35 future: what would happen if the UK copied Canada?
The employment tests in Canada are similar to the UK ones, but it is the client who gets punished if a contractor is found to be a disguised employee.

IR35 future: Australia’s legislation to tackle false self-employment
Australia uses legislation designed to identify the personal services income (PSI) of contractor businesses, with higher taxes for those caught.

IR35 successor possibilities: what happens in the United States of America
If a successor adopted a US-style independent contractor test, then any replacement would financially penalise clients for misclassification.

IR35 Solutions: Improved targeting by HMRC will increase the quality of enforcement
If it is to remain in the medium term, HMRC can apply its expertise to improve targeting and increase the quality and consistency of enforcement.

IR35 Tax Calculators

IR35 Calculator
How much does IR35 cost a contractor?

IR35 Taxes Calculator
Compare the taxes for inside and outside IR35?

Latest IR35 Review news

IR35: Budget document reveals IR35 is to be "better administered" - not abolished

IR35 is here to stay for the foreseeable future, as the Budget document reveals that the Government choses the second option to better administer IR35

Others | Wednesday, 23 March 2011

HMRC admits it “does not hold” the vital data needed to evaluate OTS IR35 reforms

HMRC’s response to a ContractorCalculator Freedom of Information request shows HMRC “does not hold” data that’s vital to evaluate OTS’s IR35 reforms.

Others | Tuesday, 15 March 2011

Contracting experts mostly reject OTS IR35 suspension option, favouring alternatives

Contracting experts, with the exception of PCG, favour IR35 reform through the OTS options of better HMRC enforcement and a clear in-business test.

Others | Friday, 11 March 2011

IR35 reform not a done deal: OTS wants to hear from contracting sector on 3 options

Contractors are not facing a ‘done deal’ on IR35 - the OTS is calling for more debate on options for reform before sending final report to ministers.

Others | Thursday, 10 March 2011

IR35 review: OTS says suspend IR35 or enforce it better, then merge income tax and NI

The OTS recommends suspending or better enforcing IR35 as an interim measure, before merging income tax and NICs, which would make IR35 irrelevant.

Others | Thursday, 10 March 2011

OTS tax relief report: little impact on contractors, but deeper tax issues flagged

The final report on tax reliefs by the Office of Tax Simplification will have little impact on contractors, but deeper tax issues are highlighted.

Others | Thursday, 3 March 2011

External Resources

Office of Tax Simplication

OTS: Small Business Tax Simplification Review, including IR35: terms of reference