Newsletters
Autumn News
The Value Of IR35
If you have a personal service company you will know all about IR35 - the rules brought in to try to squeeze PAYE and NIC out of people who work through companies. In the view of the taxman, such people are often "disguising employment" and should be taxed like anyone else with a job. The rules have caused a lot of grief since they were introduced 10 years ago.Now the Professional Contractors Group has used the Freedom of Information Act to make HMRC reveal how much tax IR35 has raised. Between 2002/03 and 2007/08, it directly earned just £9.2m in total. When it was issued in 1999, HMRC expected the measure to generate £220m per year in NICs alone.
It is probably too much to expect this government - or the next government - to learn from this and think twice before introducing over-complicated measures to counter tax avoidance that probably is not nearly as great as they suspect. We'll still have to deal with the complications that IR35 has caused for years to come.