Feeds

IR35 ‘causes significant damage’ – MPs

Review urged

  • alert
  • submit to reddit

Build a business case: developing custom apps

The Government has been urged to immediately review the controversial IR35 tax or face the wrath of the nation’s freelancers when it came to election time.

An influential group of MPs from all political parties have told the government the tax is not benefiting anyone and is causing significant damage to the UK’s army of freelance workers.

The All Party Parliamentary Small Business Group (APPSBG) said the government should instead carry out a detailed review of IR35 to ensure the costs in terms of impact on the freelance market were justified by the benefits in terms of the taxation impact.

Under IR35, which was introduced in April 2002, self-employed contact workers are treated as employees for tax and National Insurance contributions and it is designed to stop those who are members of staff in everything but name paying less to the government.

But APPSBG said there was little real evidence that IR35 has proved cost effective in terms dealing with tax avoidance without also impacting genuine businesses.

APPSBG warned the tax was driving contractors overseas because of the extra burden it was placing on their business.

And the APPSBG’s report said freelancers were questioning the government’s commitment to entrepreneurs as it appeared to them that legislation such as the IR35 actively hindered and discouraged freelancers from developing.

“Several respondents commented that they would have never been able to grow their present businesses if IR35 had been in force when they were freelancing,” it read.

The report also claimed there was potentially a large market for freelancers amongst small businesses provided they were not discouraged by real or perceived legislation.

“The shift in emphasis of legislation towards treating a freelance used on a regular basis is a concern for us as such changes are making it less appealing for small businesses to use freelancers and may limit future opportunities for independent working,” one respondent commented.

© Startups.co.uk is the biggest independent small business site in the UK. It has more than 2500 articles covering everything from taking on staff to dealing with VAT.

Next gen security for virtualised datacentres

More from The Register

next story
Assange™: Hey world, I'M STILL HERE, ignore that Snowden guy
Press conference: ME ME ME ME ME ME ME (cont'd pg 94)
Premier League wants to PURGE ALL FOOTIE GIFs from social media
Not paying Murdoch? You're gonna get a right LEGALLING - thanks to automated software
Caught red-handed: UK cops, PCSOs, specials behaving badly… on social media
No Mr Fuzz, don't ask a crime victim to be your pal on Facebook
Online tat bazaar eBay coughs to YET ANOTHER outage
Web-based flea market struck dumb by size and scale of fail
Amazon takes swipe at PayPal, Square with card reader for mobes
Etailer plans to undercut rivals with low transaction fee offer
Call of Duty daddy considers launching own movie studio
Activision Blizzard might like quality control of a CoD film
US regulators OK sale of IBM's x86 server biz to Lenovo
Now all that remains is for gov't offices to ban the boxes
Ballmer quits Microsoft board to spend more time with his b-balls
From Clippy to Clippers: Hi, I see you're running an NBA team now ...
prev story

Whitepapers

Endpoint data privacy in the cloud is easier than you think
Innovations in encryption and storage resolve issues of data privacy and key requirements for companies to look for in a solution.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Solving today's distributed Big Data backup challenges
Enable IT efficiency and allow a firm to access and reuse corporate information for competitive advantage, ultimately changing business outcomes.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.