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IR35 under review
25 June, 2010
Certain speculation incorrectly stated that Government had abolished the controversial freelancers’ tax, IR35. The news this week is that Government has confirmed that it won’t scrap the IR35 but that it will be made simpler for the self-employed to comply with.
Some of the reasons for the failure of the IR35:
- For the period April 2002 – April 2008 the IR35 contributed just £9.2m to the national budget and as this is the gross figure, it may be reasonable to assume associated costs of the HMRC’s time and manpower; thus the IR35 may well be in the red.
- The IR35 enquiries are time consuming and can often stretch out over years. The HMRC simply doesn’t have the resources to attend to the vast numbers and the enquiries they do get involved with exhaust their manpower.
- Freelancers have become a more educated force. Contractors are no longer naïve which accounted for HMRC’s previous successes. They have been empowered to take on IR35 head on.