IR35 abolition is a Dead Duck for Contractors / Freelancers

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IR35 Abolition
IR35 Abolition a dead duck

IR35 Abolition

Contractors are rapidly coming to the conclusion that IR35 abolition is now a dead duck.

There is now virtually no chance of the abolition of IR35.

The Professional Contractors Group (now IPSE) was set up in 1999 to fight the new IR35 tax and abolish it.

They fought and lost several battles in the High Court but helped contractors win many smaller battles at the Special Commissioners and General Commissioners.

IR35 investigations on UK IT Contractors
HMRC IR35 investigations on UK IT Contractors

Conservative Election Promise

They put great store on the Conservatives election position that they would ‘look at‘ IR35 if they won the election.

They even circulated a Press Release telling contractors about the Conservatives‘ ‘promise‘ at the start of the General Election campaign.

The Conservatives did ‘look at‘ IR35 again – and promptly rejected calls for its abolition.

Abolition Rejected

The committee they set up to ‘look at‘ IR35 said that if IR35 were abolished lots of contractors would spill out of Umbrella Companies and into Limited Companies.

They saw this as a bad thing.

The government makes its extra taxation not from IR35 itself but from the deterrent effect which chases contractors into Umbrella Companies.

Contractors’ Hard Cash

They estimate that contractors in Umbrella Companies pay £10,000 more a year in tax and national Insurance contributions.

caught by ir35
Caught by IR35

As there are 200,000 Umbrella company contractors that makes £2,000,000,000 a year.

The Government would not have been keen to hand that 2 billion a year back to people who make 2 grand a week on average.

If the Conservatives have rejected getting rid of IR35 I think we can safely say that abolition of IR35 is finally off the agenda – and the PCG (IPE) have failed in their raison d‘etre, the reason they were set up, i.e. to get IR35 abolished.

It looks as if IR35 abolition is deceased however they dress it up.

The Conservatives want it as much as Labour did.

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