Portillo pledges IR35 reform in Keeping Britain Competitive package
Shadow Chancellor, Michael Portillo MP, has launched the Conservatives' small businesses tax manifesto, including a commitment to reform IR35.
Speaking at the launch of the new proposal 'Keeping Britain Competitive', he said that the Conservatives have been listening to the concerns of businesses, large and small. "As a result of what we have heard, we have put together this package, 'Keeping Britain Competitive'.
"Businesses are struggling under an extra £5 billion a year in taxes and an extra £5 billion a year in increased red tape imposed by this government. They have experienced first hand the emptiness of Labour's promises to be the party of business"
The paper includes in Chapter Four a commitment to 'Reform IR35 - Labour's Stealth Tax on Entrepreneurs'. It reads:
" IR35 was announced in Inland Revenue press release 35 in the 1999 Budget, ostensibly as a crackdown on tax avoidance through the use of personal service companies. However the measures go much further than this and will damage many reputable companies, particularly in the high tech sector.
"A survey by DPP International suggested that up to 51 per cent of contractors could leave the country as a result of IR35 (Evening Standard, 1 September 1999). Large numbers of contractors are probably now rewriting their contracts so as to put their self employed status beyond doubt, meaning that the tax yield from this change is likely to be much less than the Government claim.
"Aside from the danger of a new brain drain, there are a number of anomalies with the IR35 legislation.
"The Government was foolish to embark upon this change, which has led to confusion, ill will and damage to the new economy. Our principle is that self-employed people should bear the responsibilities of self-employment and enjoy the tax advantages of their status, without any prejudice against any particular group of workers.
"We will therefore review the impact of IR35 on legitimate businesses as one of our key priorities in Government and reform the legislation to ensure it is fair."
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Susie Hughes