Nixon Williams

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Vote to scrap or repeal IR35 on Treasury website, contractors urged

Contractors now have the opportunity to vote on ideas to make savings in public sector spending, as the Treasury has published the next phase of the government’s Spending Challenge. The options include several calling for the repeal of IR35, with claims that the tax costs HMRC and the Treasury more to enforce than it generates in increased tax yields.

The Treasury reports that over 44,000 money-saving ideas were submitted by the public, who are now being asked to rate those that have the most potential. ‘Votes’ must be cast before 31st August, and those with the highest ratings will be investigated by the Treasury in greater detail.

According to ContractorCalculator CEO Dave Chaplin, this is an ideal opportunity for contractors to indicate to government the strength of feeling about the need not only to scrap IR35, but also to reintroduce a fair tax regime for the flexible contracting workforce.

“Contractors can show government that in the 10 years since it has been in force, IR35 has damaged UK PLC’s competitiveness by unfairly regulating the flexible workforce,” he says. “I would urge all flexible workers to visit the Spending Challenge website, search for IR35 and make their feelings known.”

Contractors can show government that in the 10 years since it has been in force, IR35 has damaged UK PLC's competitiveness by unfairly regulating the flexible workforce

Dave Chaplin, ContractorCalculator

Chaplin believes that a robust response by the contracting community could signal to the Office of Tax Simplification, which is currently reviewing IR35 as part of a wider review of small business taxation, that any IR35 replacement must free-up contractors to focus on what they do best, rather than having to worry about their employment status.

“The successor to IR35 must provide a framework that enables contractors to assess their tax status and liabilities with certainty,” he says. “Reasoned feedback from a broad cross section of the contracting community to the Treasury’s Spending Challenge could provide sensible options for the repeal or replacement of IR35.”

Published: 18 August 2010

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