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IR35 thought ‘toothless’ and ‘ineffectual’ in new poll

The new IR35 ruling is thought to be nearly useless when it comes to catching tax dodgers, according to a recently released research study.

The effectiveness of the IR35 ruling remains suspect for the majority of Brits, according to the research poll. When it comes to the government actually catching those using the system to reduce the amount of their tax liability, only 34 per cent of those surveyed had confidence that the ruling would actually result in greater compliance figures.

The legislation, which is targeted specifically towards employees masquerading as freelancers and contractors in order to avoid having to pay income tax and National Insurance, was categorised as ‘toothless’ by 32 per cent of those surveyed. Moreover, 29 per cent of respondents went so far as to call IR35 ‘totally ineffectual’ in catching tax dodgers, while only one out of twenty said that the legislation actually increased effectiveness.

These new research findings come hot on the heels of news that Her Majesty’s Revenue & Customs was increasing the number of IR35 investigations. In fact, industry experts say that the number of investigations has increased five times over the past year, with the latest increase coming earlier this month.

Many freelancers and contractors feel unfairly targeted by the taxman, blaming the high-profile cases of public sector employees using personal service companies in order to categorise themselves as freelancers and thus pay less tax. The majority of contract workers, both in the public and private sectors, are of course legitimate interim workers, yet the new push to enforce IR35 has left many of them with a bad taste in their mouth.

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