UK Government

The great IR35 debate rumbles on as UK government recognises positive contribution of tax and payroll advice firms working with contractors

19 June 2014

The findings of the recent Lord’s Select Committee regarding the role of personal service companies (PCS) has sparked discussion amongst the freelancing and contractor communities.

At Umbrella.co.uk, Stewart Davis, Group CEO has been monitoring proceedings closely and he had this to say: “The thorny issue of IR35 as effective tax legislation has formed a central part of Government’s look into wider issue of the use of personal service companies by those who choose to work for themselves”

“The IR35 has proven to be a great obstruction for contractors looking simply to get on with their working lives. Since the coalition assumed power in 2010, constant tinkering and mixed messages have only increased the wider uncertainty about IR35 as being ‘fit for purpose’.”

“Inevitably this latest debate and select committee meeting has been met with a wide range of reaction across industry. On a positive note, we welcomed the Government’s clear message of appreciation as regards those individuals who work as freelancers and contractors. In particular it is noteworthy that the UK Government chose to highlight the positive business and financial contribution such entrepreneurial spirit makes to the UK exchequer.”

“Too often the HMRC has been lazily pointing the finger at the self-employed working with PCSs as representative of a wider culture of tax avoidance. In reality, companies working with contractors strive to help provide clarity and guidance on labyrinthine tax compliance and payroll challenges.”

“Working transparently to offer best practice in total adherence to UK tax laws is part of the vital service we provide to our client base. To see some form of recognition of that from the Government is certainly encouraging. The IR35 does go some way towards ensuring full tax compliance; obviously we recognise, as do many in the industry, that more can and should be done to further clarify how the system works.”

“However, we are happy to see that the Government is not considering a root and branch reconstruction of the IR35. The freelance and contract sectors have seen individuals and businesses constantly battle to reorganise and adjust to tax compliance and payroll system alterations. Further changes coming on-board now would be problematic and heighten confusion over this already complex area.”

Umbrella.co.uk is a trading name of Umbrella-Company Ltd. Umbrella-Company Ltd is APSCo accredited, Professional Passport approved and are silver business partners with the Institute of Recruiters (IOR). For further information please contact umbrella.co.uk on 0800 121 6513.