The former secretary to the Treasury has called for the abolition of the "dreaded" IR35 tax rule ahead of the changes set to come into force next year.
Speaking at a Treasury committee hearing yesterday (October 21) chairman Mel Stride took aim at the government's controversial changes to its off-payroll working rules.
Mr Stride said: "Leading us all unfortunately to the dreaded IR35, I think we are all agreed this is best abolished as soon as possible."
Commonly known as IR35, the reformed rules are set to be introduced in April 2021 and will see every medium and large private sector business in the UK become responsible for setting the tax status of their contract workers.
The rules were originally timetabled for April this year, but were delayed by the government until next year in light of the coronavirus crisis.
Currently the off-payroll rules only apply to the public sector but the Treasury has always maintained reform was necessary to address "fundamental unfairness" surrounding non-compliance, despite widespread calls for the changes to be scrapped altogether.
In April a Lords select committee urged the government to "completely rethink" the IR35 rules in a damning report which found the changes would put too great a burden on businesses and were unfair on contractors.
The report warned the support offered by the taxman fell "well short" of what was required, adding that large- and medium-sized businesses were being made responsible for enforcing a regime HMRC had "struggled with for 20 years".
But Dave Chaplin, chief executive and founder of Contractor Calculator and the force behind The Stop The Off-Payroll Tax Campaign, said he was cynical about the prospect of any change following yesterday's comments.
Mr Chaplin said: "Everyone has been talking about the need to do away with IR35 for 20 years. This is nothing new.
"Unfortunately, the political will isn’t there to change matters, even if the potential outcome is a functioning tax system.
"There are also many politicians who run their own companies and would be subject to higher taxes if the playing field changed. The hens don’t tend to vote to get their wings clipped."
Introduced in 2000, IR35 is an anti tax avoidance rule that applies to all contractors and freelancers who do not fall under HM Revenue & Customs’s definition of being self-employed.
rachel.mortimer@ft.com
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