UK Directors said the OTS should have prioritised the design of a clear business test to distinguish between employees and the self-employed.
The OTS’ review of the taxation system has recommended the eventual abolishment of IR35, but it also said that another option would be to introduce a business test. However, the report pointed out that there were some very strong opinions against the introduction of such a measure.
The Institute of Directors, on the other hand, thinks a business test would be the most viable option. In a statement it said, a business test would make to easy for people to establish their tax status and it is disappointed that this was put forward as the third option rather than the main one.
Richard Baron, the IoD’s head of taxation, questioned whether various ways of working should be taxed differently to take into consideration factors like fluctuating earnings.
The PCG has said that abolition of IR35 is the best action. The Group’s chairman, Chris Bryce, said the PCG has been telling everybody concerned that IR35 does not perform as it should and the chancellor should suspend it, with the view to its permanent abolition.
The REC is delighted with the news that the OTS has put suspension of IR35 as the number one option for George Osborne to consider. As Kevin Green was quick to point out, the burdensome legislation has done nothing but create uncertainty and major headaches for freelancers and contractors ever since it came into being. It has also made it harder for people to set up their own business.
The debate over IR35 is likely to continue until the government makes a final decision on its fate. Let’s hope that comes sooner rather than later!
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