BCC urges Government to scrap IR35 and define 'self-employed'

A report by the British Chambers of Commerce (BCC) has urged the Government to repeal IR35 and work with business to define who is and who is not self-employed for tax purposes.

The 'BCC's E-Business Taskforce Report' states: 'A simple tax framework is essential to allow for future development. We would urge the Government to scrap IR35 and work with business to define who is and who is not allowed to call themselves self-employed.

'Simplicity and clarity is another critical factor that must be promoted in national tax regimes, in order to allow for the global trading potential of new communication technologies.

'Tax rules everywhere should be understandable and user friendly to allow for the potential increase in overseas sales by small companies. Rules that are difficult to understand and administer will neither encourage compliance nor facilitate the growth of electronic business.'

The report, presented by the BCC to Douglas Alexander, Minister for e-commerce, also advised the Government to scrap its target to get a million small firms trading online by 2002 and to concentrate on improving public confidence in e-commerce and improve access to broadband services.

It says the target to get one million businesses trading online by next year is: 'unlikely to be met, actually hinders progress, and is an irrelevance to business.'

The report also recommends extending the current 100 per cent capital allowance for small firms' investment in Information and Communications Technology (ICT) hardware and software, indefinitely.

Sally Low, e-business Policy Adviser at the British Chambers of Commerce, said: "Business and Government share the same ambition for Britain's small firms to develop world class e-business, but if we're going to realise this potential, we need to get the basics right, think small first and let business make it happen.

"British companies are not in the business of fulfilling targets set by any Government. They are, however, alert to the competitive benefits of trading online and where these exist businesses will drive and will respond. The role of Government should be one of enabling business in the most efficient and effective manner."

Speaking at the Smith Institute of Competitiveness in London recently, Mr Alexander said: "Competitiveness is a challenge that we face as a country... In June the Government launched a range of new measures including a new competition regime, a programme of tax reform, tackling the skills gap and raising public sector productivity.

"The Government has already taken major steps to lay the foundations for businesses to grow and prosper and for individuals to succeed... We have acted to boost education and improve the infrastructure in telecommunications, e-commerce and transport. It is why we have created a strong competition regime and encouraged increasing investment and research and development through tax and other measures so that enterprise and innovation are strengthened."