It has been 10 years since the United Kingdom introduced the ‘IR35’ tax legislation through a press release issued by Her Majesty’s Revenue and Customs (HMRC), the British Government’s non-ministerial department responsible for collecting taxes. IR35 ensures that so-called ‘disguised employees’ (contractors and freelancers) are subjected to the same taxation laws as people who do similar work under Pay As You Earn (PAYE) conditions. PAYE pertains to the amount collected from the employees by their employers on behalf of the government.
IR35 has been criticised in an article posted on 9th March entitled, ‘Ten Years On and IR35 Tax Still Damaging the Economy’. In the article, the leading business representative group, Professional Contractors Group (PCG), discusses the disadvantages of IR35 and why the government should eradicate it.
PCG condemns the failure of the government to abolish the legislation. According to the group, the law damages the economy, and freelancers continuously face costly and stressful IR35 investigations. PCG also says that the government has already admitted its unsuccessful implementation of the law.
According to PCG, the problem of ‘disguised employees’ needs to be addressed by employment law, rather than by tax law. Such a law must recognise that freelancers and contractors are in business on their own account. John Brazier, a member of the group, commented that IR35 remains one of the most ill-conceived tax laws. PCG calls for the law to be repealed and for political parties to support its abolition. The continuous implementation of the law, PCG goes on to say, is an affront to the contractors and freelancers who give an invaluable dynamism and flexibility to the economy.