As someone who was once self employed, I know how infuriating the IR35 rules can be. They are designed to stop tax evasion, but were introduced in such a clumsy way by Labour that they have affected millions of people who are acting perfectly reasonably. The IR35 tax rules are part of a wider problem surrounding the taxation of small businesses by Labour.
Ever since 1997, Gordon Brown has aggressively challenged alleged tax abuse by the self employed and small businesses through a series of measures. These have included a botched attempt to encourage SMEs to incorporate; ‘personal service companies’; ‘managed services companies’ , s600A and the recently abandoned measures to tackle so called income shifting. The result is an over complex web of rules and regulations, many of which are case law based and therefore constantly shifting. The result is the worst of worlds for the self employed: uncertainty, unnecessary risk and unfairness.
Having consulted with both business tax professionals and freelancers themselves, it is clear that simply scrapping IR35 would not resolve many of issues around the taxation of small businesses. Indeed it would, on its own, be the same piecemeal approach which has failed under Labour. So instead a Conservative Government would undertake a fundamental review of small business taxation matters, including IR35. We would mandate the new Office of Tax Simplification to conduct this review, with the aim of creating a comprehensive and lasting regime.
Our aim would be to create a clearer, stable and lasting tax regime for the self employed and small businesses. I am pleased to say this has been welcomed by those in the know. Professor Anne Redston, at King’s College, has applauded our decision, “The tax system for small business is riddled with unfairness, uncertainty and risk. An independent review is long overdue. A sensible, stable tax system should provide a bedrock on which business can build, rather than the shifting sands of the current unpredictable regime.”
This review is part of a wider Conservative aim to free enterprise and small business across the UK. We passionately believe that our agenda of a simpler tax regime & lower tax rates, less red tape & fewer regulators, and cuts in National Insurance for employers will give business the confidence to start up, invest and grow. That’s the best way to help get Britain’s economy growing again.
