The new director of the Office of Tax Simplification has confirmed that new measures to replace the contentious IR35 tax legislation will not be prepared and proposed until the Budget next year. Speaking to Contractor UK, John Whiting said that any new measures may have to take into account the amount each individual contractor earns. This could work in a similar manner to Australia’s former 80-20 rule.
Mr Whiting has accepted the unpaid tax director role for the OTS and his first port of call is to review tax relief and exemptions. At present many of the roles have not been filled within the OTS but when they are up to full complement a complete review of small business taxation will be conducted which will, of course, include the IR5 legislation.
Mr Whiting told Contractor UK: “”[IR35 is] a complex area – so I can’t promise immediate change or abolition. If [either were] easy to do, they would have been done already. We may have to go for more of the ’80/20′ approach but let’s see where we get to. What I want…is a thoroughgoing review – not just another bit of sticking plaster.”
He confirmed that in reviewing IR35 he would need to look at why it was introduced, whether that need still remains and how it could be addressed more effectively. He will be reporting directly to the Chancellor of the Exchequer or the Exchequer secretary David Gaude.
He continued: “They will be able to accept or reject our reports because ultimately they have the responsibility for the tax system,” said Mr Whiting, pointing to the two ministers. But I would hope that if we do our job properly, our recommendations will be easy to follow; and if they do reject unreasonably, they will get lots of questions as to why.”