Saturday, 31 July 2010

OTS to Tackle IR35 - Tax stuff that is...

I see that the first task of the new Office of Tax Simplification (OTS) is to conduct the review into small business tax, specifically including alternative approaches to IR35. An initial report to the Chancellor should be produced in time for the 2011 Budget.

The Government has already indicated that reviewing IR35 legislation is a priority and that it will seek to replace it with simpler measures that prevent tax avoidance but do not place undue administrative burdens or uncertainty on the self-employed, or restrict labour market flexibility.

Welcoming the inclusion of IR35 in the review, Colin Ben-Nathan, Chairman of the CIOT’s Employment Taxes Sub-Committee, said:
“In a modern, flexible labour market, workers and engagers should be free to form the contractual relationships they choose, without having their arrangements second-guessed because the tax consequences of their choice differ from those of another possible arrangement.
“Rather than the tax system being used as an override to determine a worker’s status as an employee, we think their status should be based on their legal position in employment law and that the tax and NICs liability should flow from this.”

I hope that they really do get on to this. It has been a pain for many a small business trying to expand.

1 comment:

  1. It has been a pain for many contractors. Let's hope they don't replace it with something worse!

    See recent post by Seb Maley here, which makes this very point.