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| CURRENT SECTION :: IR35 / IR591 |
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Scrap IR35; drop ‘income-shifting’ rules and provide freelancers a less restrictive business model, Alistair Darling, the chancellor, has been urged ahead of his Pre-Budget Report. Issuing the three-part wish-list, the UK trade group for contractors told Mr Darling that freelancers, by their very nature, had become one of the first victims of the recession. Evidencing their claim, the Professional Contractors Group (PCG) said that the number of freelancers in work had fallen by 12% in the past year, according to a member poll. Moreover, freelancers’ turnover for the last 12 months has fallen by about a third, PCG chairman Chris Bryce told Mr Darling in a letter sent last week to the Treasury. The letter acknowledges that the longest recession since the Second World War means that the pressure on Mr Darling for his Pre-Budget Report to deliver is even greater than usual. But it adds that the UK’s current legal and regulatory framework does not offer freelancers a "fair deal", and that, due to the current climate, there is "no scope for complacency." As a result, the burden of IR35 - “the largest single impediment to freelance working” other than the downturn, must now be removed from freelancers and from the economy. “We know from past statements by ministers that IR35 is not known to be a revenue-raising measure”, Mr Bryce wrote. “It is not at all clear that such monies as it raises in extra tax offset the considerable expenditure by HM Revenue and Customs in pursuing the many fruitless enquiries known to us.” He added that the legislation creates massive and crippling uncertainty for freelancers, as they are unable to self-assess their tax liability under it with any confidence. But fresh uncertainty is incoming for the self-employed unless proposals to implement the family business tax are dropped, as the PCG urged for its second demand. The group said: “We welcomed the decision in last year’s Budget to again postpone the introduction of legislation regarding ‘Income Shifting’, but we reiterate that it is essential these proposals are dropped completely with immediate effect. “Treating jointly-owned businesses any differently to other businesses is iniquitous and unfair. These proposals fail to take into account the shared risk and responsibility involved in running a business, and would harm thousands of such enterprises.” Even if IR35 and ‘income-shifting’ rules were both scrapped, the practical ability of freelancers to choose the right business structure would still be “limited.” Outlining its third demand, the PCG explained that tax rules prohibit agencies, in practice, from paying freelancers gross unless they have a legal form. Mr Bryce said: “PCG would like to see this measure abolished: it is a clear example of a tax measure distorting market behaviour, contrary to the government’s own express desire that the ‘tax tail’ should not ‘wag the business dog’.” The current consensus is that Mr Darling’s Pre-Budget Report will be delivered on November 25th, although the last possible date it could take place is December 2nd. Nov 9, 2009 Email this article Printer friendly page Previous Page
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