Coalition's tax pledge discredited amid 'IR35 minefield'

IR35 has featured on a long list of burdensome tax issues that the coalition government has failed to fix in its four years, contrary to its pre-election promise to simplify taxation.

Unveiling the list, the Association of Chartered Certified Accountants said that contractor taxation was one of eight areas where the state’s “tinkering” has led to more, not less, complication.

It explains that while the “minefield” of the Intermediaries legislation remains on the statute book, the new onshore intermediaries rules have “imposed additional burdens” on the area.

The only positive for contractor taxation is that a “coherent and comprehensive strategy” is now in place, ACCA said yesterday, seeming to refer to the review of the non-statutory IR35 reforms.

That review, led by HMRC and the IR35 Forum, will no doubt be cited later today, when the government’s response to the PSC Committee is due to be debated in the House of Lords.

Committee witness Jason Piper, of the ACCA, thinks that the coalition could have done more to support the Office of Tax Simplification, if it wanted to keep its promise to the electorate.

In fact, in 2010 the coalition published ‘The Coalition: our programme for government,’ in which it pledged to simplify the tax system following years of unhelpful tinkering.

“The coalition set up the OTS to review the tax system and suggest to government ways to make things easier,” Mr Piper said.

“But since founding the advisory body, the government has not given them enough of the support they need or indeed the time to do their work.”

He sees changes to the taxation of partnerships as a case in point, because the government has implemented the changes while the OTS is still in the middle of reviewing partnerships.

The accountant pointed to the list of tax issues that ministers have failed to simplify, reflecting: “This is just a snapshot of continuing problems with the UK tax system, that the coalition could have made better, and indeed some areas where they have made them worse.

“With less than a year to go until the next election the government is limited to the time they have to make things easier, but they can give the OTS more support in the time that remains in this parliament and set a precedent for future governments.”

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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