What the Revenue has learnt from IR35...

In the final part of our interview series with the IR35 chief, John Hinton, we ask what lessons the Revenue has taken away with it after three years of legal challenges and furore over IR35.

Over the past week we have looked at: what's next for IR35, what harm IR35 has done, what constitutes a genuine business according to the Revenue, their attitude to the PCG's case law strategy, the remaining uncertainty and cost of IR35, penalties, size of companies affected, benefits for contractors, competition and UK contractors escaping IR35 by going abroad.

The 45-minute interview between the UKTECH reporter, Richard Powell, and Head of IR35, John Hinton at IR headquarters in Somerset House, finished on the subject of what the Revenue had been able to take away with it following its experience with IR35 and what it would do differently if it could have a second chance to implement it.

"It's not unusual for people to be less than enamoured with tax legislation. People were unhappy with it, but that doesn't mean IR35 was wrong. It was proportionate" - John Hinton takes a final chance to defend IR35

UKTECH - IR35, as previously mentioned, has been subject to criticism in the High Court and Court of Appeal. It has also been denounced by many of the UK's most powerful representative organisations supporting British business: the Institute of Directors, the Institute of Chartered Accountants for England and Wales, the Federation of Small Businesses, Professional Contractors Group and many more besides. Statements and Press Releases have been found to contain 'emotive language' by the courts, such as Dawn Primarolo's labelling of contractors as 'tax cheats.' Bearing all of this in mind, and the fact it is unlikely the Revenue would do the same again, what lessons have you learnt from IR35?

Mr. Hinton - "I think the language of your question is quite emotive. A lot of people learnt from IR35. I would say there were two main lessons. Firstly, we found it very useful to be able to form a constructive dialogue with the PCG, even though it was challenging the legislation through the court. We have had useful dialogue and we're now seeing that continuing.

"It has been a rather complicated affair in that sense - it's not unusual for people to be less than enamoured with tax legislation. People were unhappy with it, but that doesn't mean the legislation was wrong. The legislation was proportionate."

UKTECH - Yes, but 14,000 people, in the same group, are unhappy about it!

Mr. Hinton - Let's just say if the Government was to increase the rate of Income Tax, there may be rather more people who would be unhappy. The Revenue introduced IR35 for a reason and it fits.

"The second lesson we learnt was, because the audience most disenchanted with IR35 was IT sophisticated, we've moved ourselves forward on the electronic front to communicate with them via our website. It's an improvement in many ways on the previous paper correspondence. It's very useful for getting information out to a broader audience."

Comments are welcomed from UKTECH readers about any part of the past week's series of interview stories with John Hinton. Letters to the Editor can be posted to the site here.

We will run a follow up documenting the industry-wide reaction we have had to the series next week on UKTECH and will be looking to repeat the format of the series on a regular basis with issues that affect the contracting sector.