Primarolo dismisses 'silly' contractors

Paymaster General, Dawn Primarolo, scoffed at 'silly contractors' who claim to have moved overseas because of IR35.

Treasury Minister with responsibility for IR35, Dawn Primarolo, continued to refuse to believe that contractors would leave the country because of IR35, as, she claimed, other tax regimes were similar to the UK.

She also explained that IR35 is not a new tax, but 'merely requires contractors to pay tax in the same way that millions of other taxpayers - companies, the self-employed and individuals on PAYE - pay tax'.

Speaking about the controversial IR35, Ms Primarolo said: "I shall put one or two facts clearly on the record. In the tax system, rules govern whether one may designate oneself as self-employed or whether one counts under the PAYE definitions. The category in which a worker falls dictates the reliefs and tax that need to be paid.

"No one - including consultants in service companies - is allowed to choose their category. People may wish to be self-employed, but that is determined by the terms and conditions of their contracts.

"IR35 deals with the massive avoidance of national insurance and a considerable amount of tax in which some of those service companies have engaged. It does not impose a new tax: it merely requires them to pay tax in the same way that millions of other taxpayers - companies, the self-employed and individuals on PAYE - pay tax."

Ms Primarolo has consistently refused to believe IR35 will lead to a 'brain drain' - even when some contractors have left the country to take contracts overseas and sent her post-cards from abroad.

She said: "It is suggested that such consultants will form a mass exodus, but that does not bear scrutiny because other countries have similar mechanisms to those that we are introducing to the UK system.

"In fact, I have been amused by the postcards that I have been sent by rather silly consultants from the countries in which they claim they have settled because the tax regime is easier. I am disappointed that they do not give me a reply address, because then I could write back to them to explain how the tax system of Germany or the USA, for example, requires people to pay their fair level of tax."