PCG, the membership organisation for contractors, freelancers and independent professionals, has responded to a report published by the House of Lords Select Committee on Personal Service Companies which states that Her Majesty’s Revenue and Customs need to do more to demonstrate that the revenue protection they claim for the ‘IR35’ legislation outweighs the costs it imposes.
In the report, the Committee states what PCG has always said. That HMRC has failed to demonstrate that they have a sound basis for the £550m of tax and national insurance IR35 saves through acting as a deterrent. This is despite the fact that the claimed deterrent nature of the IR35 legislation is its main rationale.
Chris Bryce, CEO of PCG said:
“The conclusion of the Committee is that abolition or suspension of the IR35 legislation, whilst attractive, would be unwise if HMRC can prove it provides Exchequer protection to the tune of £550million.
“The simple fact is, HMRC cannot do so. PCG has repeatedly asked HMRC to justify the £550m figure and the so-called 'deterrent effect’ but HMRC has been unable or unwilling to do so. It is now clear from the findings of the House of Lords Select Committee that the effectiveness of this legislation and the justification for its continued existence is built on smoke and mirrors.
"We are calling for IR35 to be suspended while proper consideration is given to its abolition. Removing this unnecessary legislation will allow the UK’s flexible workforce to do what they do best – boost British business. The Government has refused to listen to the cries for help from the hundreds of thousands of contractors, freelancers and independent professionals blighted by IR35, but they cannot ignore the findings of the Committee."
