“Her Majesty’s Revenue and Customs need to do more to demonstrate that the revenue protection they claim for the IR35 legislation outweighs the costs it imposes”
Said the House of Lords Select Committee on Personal Service Companies in its report.
The Chairman of the Committee, Baroness Noakes, said:
“During the inquiry, it became clear to us that there is an increasing use of personal service companies by freelancers and contractors, who are part of the UK’s flexible workforce. There are many reasons for the use of personal service companies, including the possibility of reducing tax and national insurance bills. The Government’s anti-avoidance legislation, often referred to as IR35, is complex and raises its own problems.”
“HMRC failed to demonstrate that they had a sound basis for the £550m of tax and national insurance that they cited as being at risk if IR35 were to be abolished or suspended. ”
The report also found that many low paid part-time workers employed via personal service companies may also be at risk of being identified as being included in the IR35 legislation.
For those who have more than one client, i.e a 1 day a week here, 2 days a week there etc, the IR35 system is still a nightmare.
Is there a light at the end of the tunnel?, Will IR35 be abolished or suspended? We will wait and see.
Several years ago the IAP was campaigning for IR35 not to be introduced and we will where possible represent our members views to these committees when the opportunity arises. Let us know what you think.
See http://www.parliament.uk/business/committees/committees-a-z/lords-select/personal-service-companies/news/personal-service-companies-report-published/ for the House of Lords release.
