The Liberal Democrat Working Group on Information Technology, headed by Cambridge MP Julian Huppert, maintains that a Nick Clegg-led government would ditch IR35.
More precisely, IR35 would be suspended to enable a data-gathering process aimed at ‘permanent abolition’ of the much-criticised legislation, a Liberal Democrat paper on the future of the digital economy argues. Entitled Preparing the Ground, the document appears to have sown as much confusion as hope amongst the UK’s contractor community. The chief reason is that it refers to the deleterious effects of HMRC rules on IT contracting but fails to mention contractors equally affected who work in other sectors.
Nonetheless, the paper constructively revisits some of the issues that could so easily succumb to social amnesia – namely, the alternatives set out for IR35 reform by the Office of Tax Simplification (OTS). In particular, it draws attention to the options the government rejected – the development of a new ‘business test’ (option one) and the immediate suspension of IR35 to gather additional information on the effects of permanent abolition (option three). This is the option the Lib Dem document argues is the preferable one.
Freelance trade group PCG endorses this view, stating “Our position remains that we support the suspension of IR35 and we look forward to discussing this new report with Julian Huppert MP who heads the report in person in the near future.”
The PCG went on to say that the Government, which Mr Huppert supports, opted in the 2011 Budget to go for option two – improved HMRC administration of the regulations. Is dissension stirring in government ranks? Watch this space – we’ll keep you informed.