Filed under BlogThursday, 10 March 2011
The REC has today responded to the Office of Tax Simplification's small business taxation review by calling on the Chancellor to take decisive action on the recommendations.
Commenting on the report, REC Chief Executive Kevin Green said:
“We were pleased to be able to contribute the views and experiences of our members over the course of this review. Today's report shows that the OTS has listened to the concerns of agencies and small businesses across the country, and has used this evidence to develop robust proposals for genuine tax simplification.”
The OTS’ report to the Chancellor outlined a number of possible simplifications for IR35, a tax rule originally intended to prevent false self-employment. The report's lead option is a suspension of IR35, with a view towards permanently abolishing the legislation.
Kevin Green continued:
“It is good news for contractors and agencies alike that the OTS has chosen suspending IR35 as their lead option for the Chancellor to consider. This was one of the two choices we deemed acceptable from this review, and it reflects a real understanding by the OTS that IR35 is unworkable in its current form. This regulation has never delivered on its its stated aim of preventing bogus self-employment and recouping tax owed to the Exchequer, despite being in operation for over a decade.
'”What the IR35 rules have done is create uncertainty, extra cost and burdensome bureaucracy for self-employed contractors and the agencies they engage with. The lack of certainty has also made it more difficult for individuals to start their own companies and provide the flexible skills our economy so badly needs.
'”Today's lead recommendation would be a genuine simplification, and we call on the Chancellor to take decisive action on the back of this report. While the OTS' wider proposals to merge tax and National Insurance contributions will undoubtedly require further examination, lifting the burden of IR35 from the shoulders of contractors and small businesses is a crucial first step towards a truly pro-enterprise, pro-growth policy agenda.”
Contact: Ed Sexton
Phone: 020 7009 2192