The House of Lords Personal Service Companies Committee has heard conflicting views about IR35 this week, with some industry bodies calling for its abolition while another recommended that it should be left in place.
PCG chief executive Chris Bryce told the committee: “The simple fact is, IR35 is outmoded and unnecessary. We, along with the Federation of Small Businesses (FSB), seek its abolition.”
The FSB’s chair of taxation and finance affairs, David Ramsden, said: “Our members always have problems understanding IR35. IR35 is a sledgehammer to crack a nut and you only get around it by spending money.”
In a statement to Recruiter magazine, he described the legislation as a “wrong” and “unnecessary” measure to tack a small amount of genuine abuse.
Freelancer & Contractor Services Association (FCSA) spokesman Martin Hesketh said he believed the legislation should simply be left in place in case lawmakers, who have shown little understanding of the complexity of true self-employment amongst the UK’s freelance contracting community, came up with a new alternative with unintended and potentially “catastrophic” consequences. He told the committee:
“Nobody’s come up with a better answer. I would leave it alone.”
APSCo’s head of external affairs, Sam Hurley, adopted a more conciliatory tone, telling the committee that her organisation was pleased that HMRC “is reviewing its guidance”. She raised concern about the misuse of business entity tests in some public sector organisations to define employment status purely for tax purposes, however, and urged the government to recognise the difference between “highly-skilled contractor professionals and low-paid temps”.