The hopes of the contracting community were dashed last week when the Budget failed to make clear any plans to abolish the contentious IR35 rule. Instead, the chancellor merely confirmed that a review would take place. However, the Daily Telegraph then published an interview with Mark Prisk, small business minister. The interview appeared to have taken place after last week’s Budget and suggested that IR35 “will now be abolished” without quoting Mr Prisk directly.
Many accountants have taken this article as a sign of success in the long running battle against the ‘deemed payment rules’. This is the reaction from Francesca Lagerberg, head of tax at Grant Thornton. Speaking to Contractor UK she said that “the hopes for abolition looks very much on the cards” since contractors have suffered under the IR35 rule for “over a decade”.
However, following this speculation it has now been confirmed that the Daily Telegraph interview with Mr Prisk was actually conducted weeks before the Budget and he did not make any confirmations that IR35 would be abolished. This confirmation was made when Contractor UK contacted his office and HMRC who confirmed that the government’s position on IR35 stands, i.e. a review will be taking place with no guarantee that the tax rule will be repealed.
HMRC commented: “The review of IR35 is linked to the proposed wider review of small business [tax]. Until the precise terms of reference are agreed, we cannot say much more.”