IR35 concludes Parliamentary passage
The controversial IR35 measure all but concluded its Parliamentary passage in the Finance Bill this week (July 19) with Opposition MPs continuing to criticise the measure, while the Government remained intransigent.
The Finance Bill was given a Third Reading Stage by 310 votes to 170 and, although the Opposition did not table any amendments to the IR35 clause - deciding they had tried this earlier - they took the opportunity of the concluding speech to warn the Government of the damage to small businesses which lay ahead.
David Heathcote-Amory, Shadow Chief Secretary to the Treasury and Conservative MP for Wells, said: "The House will recall that IR35 was announced last year, not--typically--by the Chancellor or a Minister at the Dispatch Box, but in the 35th press release put out on Budget day by the Inland Revenue. It amounts to an attack on people who provide services through companies, especially in the high-tech sector that the Government say that they wish to encourage. The Government are obsessed by tax avoidance, but their approach in this case is hitting legitimate businesses that set up companies to help the companies that they serve. They are not avoiding tax and, what is more, they provide the very flexibility in the labour market that the Government say is an asset. The Government criticise other European Union countries for their lack of labour market flexibility, but domestically the Government are piling on more regulation and bringing out more tax measures that undermine that national asset about which they boast."
Mr Edward Davey, LibDem spokesman for the economy and MP for Kingston and Surbiton, pledged that one of the reasons the LibDems would vote against the Third Reading was the 'outrageous measure ion IR35'. He said: "The most significant negative point, however, is IR35, with which we disagree profoundly. The abuse on which the Government have tried to clamp down is far more narrow than Ministers have made it out to be. Measures to clamp down on tax avoidance could have been more narrowly targeted and far more effective. The way in which the Government have chosen to act means that many small companies in the information technology sector will be seriously hit.
"What has concerned us most is that the Government have at no stage admitted that market forces require many small firms--in the IT industry, the oil industry and the engineering consultancy sector--to form limited personal service companies. At no time on Second Reading or in Committee have Ministers acknowledged the fundamental objection to IR35. Many companies are forced into the arrangements that they make by market pressures and by the larger companies. The Government seem unaware of that in spite of all our arguments."
Opposition Paymaster General, Richard Ottaway, said: "The infamous IR35, which is having a colossal impact on the IT sector and the way it behaves, is not stimulating business in the way that the Government claimed in their manifesto."
The Finance Bill will now receive Royal Assent in order to become law.
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Susie Hughes