Sue Richards closes her IT company and returns to permanent work

I would like to draw your attention to the so-called "IR35" tax measures, which are designed to penalise small businesses who provide consultancy, expertise and temporary work in skilled areas such as Information Technology, Engineering, or anywhere where personal service companies are used to provide services to other companies.

I understand that the bill has not received Royal Assent, but it is still causing huge uncertainty in the knowledge based economy.

The government says that it is not intending to change the way we work, but acknowledges that 66,000 companies will close down as a result of this bill. Surely this is unfair to all small companies in any sector?

I ran an IT service company for just over 2 years, raising over £20,000 in Corporation tax and more in personal Tax, Employees NI and Employers NI (not to mention VAT) for the Government along the way. The uncertainty brought by these measures, and the lack of opportunity to invest in new technology with retained profits, has forced me to close the company and return to permanent work with a medium sized consultancy which will have none of the restrictions indicated by IR 35 with regard to expenses, investment, training, dividends etc.

I find it ludicrous that I could not carry on in the same manner as the firm I work for just because I 'brought-in' all the company income through my work.

The IR seem to be forever amending the bill to catch anything that they see as personal service companies trying to avoid their measures (nothing illegal about avoidance until IR 35 came along!).

For instance, when this bill was first introduced, it was designed to catch all those that left a company on a Friday and came back to the same company on the following Monday using a personal service company because their current employers left them no option to stay as employees of the larger company. Now it has changed to catch all users of personal service companies and partnerships regardless of reasons for setting them up in the first place.

On the other hand, the government are saying that they are encouraging entrepreneurs -- I can't see how they can justify this when they are adamant on bringing in such stifling and restrictive regulations.

Kind Regards

Sue Richards

Soon-to-be ex-director, Logistica 2000 Ltd.