Report: Scrap IR35 tax law for contractors

A report by the Office of Tax Simplification has recommended that the government either abolishes or amends the IR35 tax law, which addresses tax payments for contractors

A tax law blamed for adding stress and expense to the lives of freelance IT contractors should be suspended and possibly abolished, a Treasury body said on Wednesday.

The IR35 tax law was introduced in 2000 to address a loophole that allowed contractors to reduce their tax liability by providing services to businesses through a limited company.

A report by the Office of Tax Simplification (OTS) recommended that the government either suspends and later abolishes the IR35 law; keeps IR35 but improves the way it is administered by HM Revenue & Customs (HMRC); or introduces a simple test to see if contractors should make additional payments to HMRC under IR35.

For more on this ZDNet UK-selected story, see IT contractors face IR35 tax reprieve on silicon.com.


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