IR35 'confusion': Primarolo responds to Times
The Paymaster General, Dawn Primarolo, has responded to Fran Littlewood's recent article in the Times which highlighted the confusion being caused by IR35.
Primarolo claims that the article, which suggested that up to 500,000 may be affected by the legislation, risks alarming people who are unlikely to be affected.
"Those who will be affected are typically employees, but employed by limited companies which they have bought "off the shelf". Arranging their affairs in this way allows them to avoid being treated as an employee of the companies they work for, when in reality they work alongside other employees, doing the same jobs, often staying with the same client for many months or even years. Before this legislation, they typically paid only 21 per cent of their earnings in tax and national insurance, compared with 35 per cent paid by an employee on comparable earnings."
The PMG goes on to claim that the legislation will correct this discrepency and ensure that the tax and NI system designed for the self employed "...will apply only to those who are genuinely small businesses, taking risks and creating wealth and employment."
Primarolo suggests that anyone who is still confused should visit the Inland Revenue Website for more information!