UK Government Promises To Monitor IR35 Implementation

by Caroline Maxwell, Tax-news.com, London

05 June 2001

Independent IT contractors have taken heart from the fact that the government recently admitted that it would monitor the implementation of its notoriously unpopular IR35 legislation, believing that this may hint of possible changes to come. Both the Tories and the Liberal Democrats have promised to scrap the tax in their election manifestos, and are seemingly delighted at what they see as a climbdown on the part of the government.

E-Commerce Minister Patricia Hewitt admitted last week that the introduction of the tax on one-man service companies two years ago had been badly handled, and that the original proposals were too cumbersome, but then proceeded to cause something of a stir in the IT community by adding that: '...quite honestly, the very alarmist talk we were getting - from the Conservatives amongst others - of thousands of skilled IT workers fleeing the country simply hasn't happened.' Both in the trade press, and online, a multitude of swift and somewhat peeved responses from (now)expatriate contractors seem to contradict this.

Alan Duncan, the Conservative spokesman on IT believes that the admission of the need to monitor IR35 was in itself an admission of failure, and hit back at the E-Commerce Minister's dig, stating that: 'It's either a big lie because there is an election on, or a concession which proves we were right all along.' Richard Allen, Chair of the IT select committee and Liberal Deomcrat MP also believes that the government has been heavy handed, warning that 'they risk stifling enterprise.'

Interestingly, in hinting that the government was prepared to be flexible in the implementation of IR35, Patricia Hewitt made no mention of the High Court decision which ruled that the implementation of the controversial legislation would have to be revisited as the government had failed to enforce the legislation correctly in the first place.

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