As rumours continue to circulate that IR35 abolition was never seriously on the table for Government consideration, the Office for Tax Simplification has moved to pole-axe further speculation. The freelancer group PCG has come in for particular fire by some commentators in the UK’s contractor community, with accusations emerging that it backed down from calling for outright abolition after a tip-off that it would fall on deaf ears.
In a forthright statement, the OTS has refuted such accusations, as well as speculation that it was less than impartial in its advice to Government following its review of small business taxation. In an interview with the news outlet Shout99, an OTS spokesman insisted that the organisation had considered a wide range of options for IR35, including abolition. Ultimately, the OTS report came down in favour of two: suspension pending eventual abolition, or retention with significantly improved administration by HMRC. A third option was also put forward – the application of a “genuine business test.”
He was robust in his defence of the OTS’ impartiality: although the Chancellor chose the first option, the report did not give any of the three options more limited consideration than the others. His comments were corroborated by a statement from the Treasury, which confirmed that the retention decision was made by the Chancellor after full consideration of all the options laid out in the OTS review. The Treasury remained concerned about the potential for a significant loss of legitimate revenue if IR35 abolition was pursued.
One OTS Committee member, Crawford Temple from Professional Passport, condemned rumours that the decision was a “done deal” months before the publication of the OTS review as completely unfounded.