The Conservative party said yesterday it will abolish the
controversial IR35 tax on IT consultants if it wins the next UK
election. They would replace it by targeted legislation to deal
with any abuse of personal service companies for purely tax
purposes.
The Labour government introduced the IR35 legislation in March
1999 to remove what it saw as a loophole for IT contractors and
others to trade as limited companies to avoid tax and National
Insurance Contributions, in circumstances where the individual
worker would otherwise be an employee of the client for whom they
work.
The Professional Contractors Group (PCG), a representative body
of independent contractors operating in many sectors, including IT
and engineering, has long argued that the proposals will actually
catch any limited company worker (or similar intermediary) who is
working for a client, “but who does not meet the outdated
definition of self-employment.”
Shadow Trade and Industry Secretary, David Heathcoat-Amory,
said:
“IR35 was a sly measure which turned into a
disastrous attack on the IT sector. In seeking to eliminate the bad
it destroys so much that is good. The Government fails to
understand that contracting out is a legitimate and growing
practice in IT and other sectors.”
He added:
“Labour have been deaf to the reasonable
representations from the industry. By contrast we are taking
positive steps to free people who are essential to the new economy
from this repressive measure.”
The Conservatives say there will be further consultation with
the industry before replacement legislation is put forward.
