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Tax avoidance is top priority on the agenda for government

The government’s top priority is dealing with tax avoidance when it comes to their agenda, according to Prime Minister David Cameron.

The government has been on a crusade to stamp out any and all forms of tax avoidance after reports emerged that Ed Lester had been up to some funny business by using a personal service company to receive his pay. The exposure of student loans chief and his tax avoidance scheme led to a government review in order to investigate off-payroll arrangement abuse – and a raft of tax avoidance headlines for the rest of 2012.

The government may have eventually declined to adopt any proposals that emerged from its consultation with tax industry experts, but IR35 rules were indeed amended with an eye towards no longer allowing ‘office holders’ to use personal service companies to their advantage. However, IR35 has been criticised for it ineffectiveness in this case due to the fact that contracts made with the personal service company are in compliance with disguised employment rules, provided that the payee is the same personal service company.

Instead, Her Majesty’s Revenue & Customs says they will be actively targeting individuals attempting to cower behind the aegis of a personal service company in order to avoid paying their fair share of tax. However, the taxman will undoubtedly have its hands full in its struggles to ensure that any and all suspected non-compliance is investigated thoroughly.

Of course, it is to be noted that these new ‘office holder’ amendments for IR35 only address those working in the public sector. Contractors and freelancers working private sector jobs have not experienced any changes to their IR35 regulations.

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