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How will the election affect IR35?

The IR35 tax law raised massive controversy earlier this year when the Inland Revenue introduced it. Now the Conservatives say that if they win, they will scrap it
Written by ZDNet UK, Contributor
The government claims that IR35 was brought in to stop the "Friday to Monday" syndrome -- where IT workers resign their salaried job only to carry on doing the same work, but as a self-employed contractor. At the High Court recently, a body representing the UK's self-employed IT contractors argued that the government's IR35 tax rules are illegal. Now the Tory Party says that if it wins the election, it will scrap the unpopular rule. IR35 came into force in April 2000, and increases the tax liabilities of a consultant's personal services company by taxing turnover as income. Lawyers for The Professional Contractors Group (PCG) have argued that this unfairly penalises small IT services providers because large organisations aren't affected, making IR35 in effect an illegal state aid for big companies. According to the PCG, IR35 will drive thousands of the UK's high-tech workers overseas. NEWS:
Election 2001: Fight isn't over for IR35
Wed, 23 May Liberal Democrats hope to make IR35 less draconian, and will keep raising the issue in debates Tory Party promises to abolish IR35
Fri, 11 May The Conservative leader says he will get rid of the controversial IR35 tax rule if his party wins the election IR35 campaigners hit the road
Wed, 09 May A series of roadshows will help IT contractors learn how to cope with the Inland Revenue IR35 rules foster conflict
Mon, 09 May Inland Revenue still struggling to work out implementation of tax IR35 ruling means tax chaos
Mon, 02 Apr IR35 will stay but Inland Revenue 'completely discredited' by ruling, claims the group that brought the case over the government's controversial tax law IR35 decision due next Monday
Tue, 27 Mar IT contractors will hear in a week whether they have won their fight to overturn the government's controversial tax law IR35 could cost companies billions in benefits
Wed, 21 Mar Judge argues that an IT contractor who has to pay the same rate of tax as an employee deserves to get the same benefits IR35 latest: Contractors face tax chaos
Thu, 15 Mar Judge warns that the PCG has only presented a case for IT workers, not all contractors IR35 could rob Britain of the next Microsoft
Thu, 15 Mar Thousands of the UK's independent IT workers could move abroad, and take their high-tech companies with them IR35 tax battle hits the courts
Tue, 13 Mar Professional Contractors Group takes its claim -- that IR35 is an illegal tax boost for big business and restricts the free movement of workers -- to a judicial review IR35 battle to hit the High Court
Fri, 09 Mar The UK's independent IT contractors aren't happy about being taxed more than the big agencies Repeal of IR35 mooted
Sat, 24 Feb IR35 taxes are undermining the IT sector COMMENT
Closing the loopholes in IR35

The laws to discourage tax dodging, should not go so far that they make it better for people to leave the country and work offshore. Guy Kewney isn't sure whether abandoning IR35 altogether is the answer -- but it certainly needs some serious tidying up. For complete business coverage, see ZDNet UK's Enterprise Channel. Take me to ZDNet's Small Business Special. Have your say instantly, and see what others have said. Click on the TalkBack button and go to the ZDNet News forum. Let the editors know what you think in the Mailroom. And read other letters.
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