Estimated IR35 take nearly doubles

According to post-Budget figures, the Government now estimates the 'take' from IR35 to be £900 million.

The 'Red Book' containing the detailed figures behind the Budget announcements shows that the Government now estimates IR35 to bring in £900 million.

The original estimate in the Government's Regulatory Impact Assessment was £475 million. This was later scaled down by the Revenue.

However, when the Professional Contractors' Group conducted its own RIA, factoring in losses in corporation tax, increased compliance costs, moves overseas etc, it found that IR35 would actually cost the Government £705 million.

Shadow Paymaster General, Richard Ottaway MP called on his opposite number, Dawn Primarolo, to explain why the costs of IR35 have been doubled by the Red Book: from £475 million in 1999 to £900 million this year?

Mr Ottaway said: "Nearly £1 billion out of the pockets of the self-employed is serious money. The brain drain could develop into a mass emigration. The Red Book shows that, as a result of IR35, the burden has this year leapt from £475 million to £900 million. That is one heck of a chunk to take from the self-employed."