Small businesses could be freed from IR35 tax
The Office of Tax Simplification recommends the IR35 tax is abolished or dramatically reformed to make life easier for smaller companies.
The IR35 tax law, levied on small business and contractors, needs to be scrapped or seriously shaken up, according to a Government body.
The Office of Tax Simplification (OTS) has reviewed the law, which was introduced in 2000 in order to decrease tax avoidance as a result of using intermediaries, but has been considered by many to damage contractors and small businesses.
In a report released yesterday, the OST recommended to the Chancellor, George Osborne, that the legislation was either binned, its administration by HMRC was revamped or a new test was brought in to check the law was being implemented correctly.
“Our aim is develop practical ideas that will make things easier for small businesses when it comes to their tax responsibilities,” said John Whiting, tax director of the OTS.
“Having listened to the concerns raised through our roadshow events and many representations, we hope we’ve identified the main problem areas and that people will agree these initial recommendations will improve matters.”
The report is only an interim edition and the OTS was still keen to hear feedback from others affected by the tax law.
Osborne is not expected to respond to the report until after he has delivered the budget speech on 23 March.
Th full report can be read here.