Government IR35 Victory
Will the end result of all this be an overwhelming Government IR35 victory?
An accountant who deals with IT contractors sent us this in response to an IR35 article that we had.
We had said previously that one accountancy firm had told us that whereas two years ago, two thirds of contractors were declaring themselves inside IR35, now only one third are declaring themselves inside IR35.
Here it is:
Contractors Fooling Themselves
Apologies for the tone of my comments but I just tire of contractors trying to convince me that IR35 is a voluntary tax!
Genuine businesses are not caught, but if HMRC have decided to legislate and litigate to stop disguised employees using limited companies then they will succeed.
It’s not a matter of if but when. I saw the same thing happen in Australia. That horse has bolted I reckon and its time to accept it. Even if they lose a few cases they will make the legislation tighter.
They’re not giving up on this one that’s for sure.
IT Contractor Comment
There are still far more contractorrs using personal service companies than umbrella companies. That’s almost 18 years after they first passed the IR35 legislation.
There are some very high profile IR35 cases where HMRC chased contractors for tens of thousands of pounds. This includes both interest and penalties.
However, it still remains the case that you are still far more likely to be struck by lightning than to have an IR35 investigation.
Public Sector IT Contractors
The Government’s actions in the publci sector, though, threatens contractors’ livelihoods. They are basically making it difficult for contractors, using personal service companies, to operate in the public sector.
Indeed, a couple of Government departments say that they will no longer use contractors who operate through personal service companies.
This means that contractors who are outside IR35, legally, will either have to stump up IR35 tax or join umbrella companies.
So, this is one Government IR35 victory.
If it works in the public ector they may roll it out to the private sector too.
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