Businesses call for a halt to IR35
In a joint letter, industry leaders called on the Government to think again about IR35 before it's too late.
In an open letter in the Financial Times, the Director General of the CBI, Digby Jones; the National Chairman of the Federation of Small Businesses, Ian L. Handford and the Chairman of the Professional Contractors Group, Gareth Williams, called on the Government to 'draw a halt and consider a better way forward'.
The letter reads: "As representatives of industry and small business, we would urge the government to reconsider the IR35 measure, currently before parliament in the Finance Bill 2000.
"This legislation, which will treat small businesses as employees for tax and NIC purposes, will prove detrimental to the small business sector, the knowledge-based economy and the UK's drive to lead the world in high technology. The legislation will also discourage entrepreneurs to remain UK-based tax payers.
"While we support the government's attempts to create a fair taxation system and support measures to crack down on blatant abuse, the IR35 provision is unfair, poorly targeted and ultimately unworkable. We would call on this government to draw a halt to this, while there is still time to do so, and to consider a better way forward."
However, Government officials told the FT that Ministers were adamant that the measure was necessary to plug a loophole. The Government would be pushing ahead with IR35 and 'would not be put off by threats that workers would go abroad. They repeated a claim previously made by Paymaster General Dawn Primarolo that there was not a great deal of evidence that contractors were leaving the country, particularly as 'other countries have their own legislation closing the loophole.'
David Ramsden, political director of the PCG said: "Representatives of all sections of the business community are opposed to IR35. This letter from the CBI, FSB and PCG, who represent hundreds of thousands of small and large businesses cannot make it clearer. And it comes only days after the Institute of Chartered Accountants has described IR35 as 'fundamentally unfair', 'irrational', 'ill-defined', 'unjustifiable' and an 'enormous additional burden on small businesses'.
"But the Government continues to display unbelievable arrogance in firstly ignoring the evidence, and then when it's hitting them in the face, dismissing it with half-truths. They are now so out-of-touch with small businesses and e-commerce, that they are not just presiding over its demise, they are actively encouraging it, without even realising what they are doing."
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Susie Hughes