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UK Parliamentary Committee And Professional Contractors Group Attack Treasury Over IR35

Jason Gorringe, Tax-News.com, London

07 February 2001

The UK's long-running IR35 tax saga still seems to have plenty of life left in it. The Treasury's imposition of employment status on many previously self-employed consultants and small contractors has supposedly led to a mass exodus of professionals from the UK to friendlier tax climes, but it has certainly caused a high-level war of words between the Treasury and its enemies.

Now the Professional Contractors Group (PCG) has picked up on criticism of the Treasury's failure to consult on IR35 by the Parliamentary Treasury Select Committee, and its Chairman has written to the Prime Minister asking him to act before it's too late for tens of thousands of small businesses.

In his letter to Tony Blair, PCG Chairman Gareth Williams says: "In the light of the concern expressed by the Treasury Select Committee (Third Report - February 1) about the lack of fairness and efficiency in the Treasury and their reference to IR35 as an example of this failing, perhaps we can encourage you to take a personal interest in this damaging matter.

"The Select Committee is not alone in its view. The IR35 legislation has been condemned as 'unfair and unreasonable' by the ICAEW whose Tax Faculty gave it a poor three out of ten marking."

Mr Williams also complains that the Prime Minister had not replied personally to a previous letter: "In response to our letter of November 6, we were most disappointed to have received a reply from your Paymaster General, which simply repeats the sound-bite justifications for IR35 with which we are already familiar."

The Treasury Committee's report, released on 30th January, criticised the Chancellor and the Treasury in general for spending its time meddling in the affairs of other departments while not paying sufficient attention to the development of tax policy, mentioning IR35 alongside the tax 'mixing' debacle and repeating one of the criticisms voiced by the (otherwise rather feeble) internal review of the Inland Revenue and the Treasury conducted last year: "It remains difficult to identify anyone in the structure who has the background and the capacity to think about the tax system as a whole".

The truth is that despite the ample spin placed on tax policy by Prime Minister and Chancellor alike, and their oft-trumpeted devotion to improving the climate for business, the Government's tax actions have been a mixture of doctrine and incompetence, resulting in downright disaster.

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