Dawn Primarolo stays tight-lipped about IR35 legal costs
Paymaster General Dawn Primarolo has refused to disclose the amount that taxpayers could pay in legal costs over the IR35 challenge brought by the PCG.
In a written Parliamentary Question, Opposition DTI spokesman Alan Duncan (MP for Rutland and Melton) asked the Chancellor of the Exchequer "How much was spent in legal costs defending the recent judicial review permission hearing of IR35; and what estimate he has made of the final cost of defending the judicial review if the case is concluded at (a) the High Court, (b) the House of Lords and (c) the European Court of Justice." Dawn Primarolo replied: "I have nothing to add to the answer I gave to the hon. Member for Altrincham and Sale West (Mr. Brady) on 24 November 2000."
The answer to which she referred him to went as follows… "The extent to which the costs of the legal action will fall to the Government will depend on the outcome of the case."
Four days after Mr. Brady had seen his question neatly side-stepped, Andrew Stunell (Lib Dem MP for Hazel Grove) decided that specific detailed questions could be a better approach. He asked the Chancellor:
"(1) what is the median income for each quartile of taxpayers whose tax liability will change as a consequence of the introduction of IR35; and if he will make a statement.
(2) what estimate he has made of the number of persons whose tax liability will change as a consequence of the introduction of IR35; and if he will make a statement.
(3) what projections he has made of the change in tax liabilities of a person on the median income of each quartile of taxpayers whose liability will change as a consequence of IR35; and if he will make a statement."
Primarolo responded: "It is estimated that 90,000 companies will be affected by the introduction of the new legislation to tackle avoidance of tax and National Insurance Contributions through the use of personal service companies. Information on the number of persons or taxpayers affected is not available."
On 15 November Mr. Brady managed to elicit another answer by asking "What has been the total cost to public funds arising from the implementation of IR35 and the handling of queries and appeals from businesses affected by it?"
Primarolo responded: "So far, the main additional activity undertaken by the Inland Revenue associated with the introduction of the 'IR35' legislation has been the provision of advice to taxpayers and their advisers. This service has been provided by existing staff as part of their normal duties."
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Richard Powell