Con-Dems look into scrapping IR35 tax law

The Conservative-Liberal Democrat Government is looking into the possibility of scrapping the controversial IR35 tax law. The law was brought in by the Labour Government in 2000 to force contractors to pay tax and national insurance on earnings of people working within the contracting company if they are akin to employees of the client company. The aim of the tax was to stop people avoiding tax and has caused a lot of confusion amongst IT contractors over their tax status. In 2008, one IT contractor had to cough up £99,000 in taxes when he was deemed to have fallen the wrong side of the line. The new Government has not said that it would definitely scrap the tax, but it wants a simpler tax regime that reduces red tape for small businesses. The Government still wants to stop tax avoidance, so its new proposals are awaited with interest. The Professional Contractors Group, which was set up in 2000 to lobby against the tax, claims that the IR35 has not achieved its purpose and brought in a mere £1.5m extra in tax, instead of the estimated £220m a year that the Government had wanted.