Prisk hints at abolition of IR35

Small Business Minister Mark Prisk has given his strongest indication yet that the IR35 tax rules, which affect freelancers, could be scrapped after a review over the summer.

Speaking to the Daily Telegraph, Mr Prisk said: "We want to make sure that we could undertake a comprehensive review of small business taxation in a way that makes the need for the current IR35 legislation redundant. But we want to make sure whatever we change is a lasting settlement. One of the problems with IR35 is that it's a constantly changing set of rules."

His comments come after the Chancellor announced in the Budget that there would be a review of IR35 and small business tax.

The Professional Contractors Group (PCG) has welcomed the news. Chris Bryce, PCG chairman, said: "I am delighted to say that there is now real momentum behind the abolition of IR35. There is still much work to be done but we hope we can work with the Government to find a fair and acceptable settlement for all freelancers and contractors."

Francesca Lagerberg, head of tax at advisory firm Grant Thornton, said: "The abolition of IR35 looks very much on the cards. The IR35 rules have created problems for over a decade for entrepreneurs using personal service companies and have led to hundreds of tax cases, many of which have been lost by HMRC."

However, Seb Maley, freelancer services manager at Qdos Consulting, warns that it may be a case of 'better the devil you know' when it comes to IR35 legislation in its current form. He told BAD News: "There is the argument that IR35 is confusing and complicated but we have to wait and see what will take its place. It could turn out to be even worse and people may feel that it was far better in the first place! Obviously I can't see the Revenue doing that, but I think it needs to be simplified, it's gotten ridiculous with the number of elements involved."

To read the full interview with Mark Prisk in the Daily Telegraph click here.

PCG publishes an overview of IR35 legislation, click here to view it.