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IR35 reform plans questioned by contracting bodies

The Government’s IR35 reform plans have fallen under fire from contracting bodies after a recent report contradicted official compliance data.

A new report from a Public Accounts Committee says that the tax compliance figures that Her Majesty’s Revenue & Customs are wildly inaccurate. In fact, compliance among freelancers and contractors is likely much higher than HMRC’s suggestions, the PAC report says – in fact, the report’s findings say that an overwhelming 90 per cent of temporary workers in the public sectors are tax compliant! That’s not an insignificant figure, especially since the PAC report gathered figures from a wide variety of Government departments.

Meanwhile, the compliance rate as formerly believed before the Budget 2016 was a paltry 10 per cent. Based on this (obviously massively erroneous) figure, HMRC estimated that the new IR35 reforms would rake in some additional £400 million in tax revenue. Treasury officials and representatives from the tax authority maintained their belief in this ridiculously low figure at a compliance seminar recently, though when they were pressed on the matter they didn’t exactly come forward with any more information. Normally when something like that happens, most people will begin to look a bit askance on an organisation that won’t back up their claim with valid statistics and official figures.

Listen, no one is saying that non-compliance is nonexistent. It happens, of course. People either make mistakes or are trying purposefully to get one over on HMRC. But for pity’s sake, the difference between only 10 per cent of public sector contractors being in compliance with tax regulations and 90 per cent being in compliance is not within the standard margin of error! Either HMRC has gone completely around the bend or this recent PAC report is completely fabricated – and my money is on the taxman being complete rubbish.

The data in the PAC report is all there right in front of us, for anyone to read and understand. Yet HMRC hasn’t exactly publicised their own data that led them to their now obviously outrageous claim. Honestly if you ask me the fig leaf of “ending tax avoidance” has been snatched away from the tax authority’s grand plan when it comes to their IR35 reforms, laying bare for all the Government’s blatant plan to grab as much cash from public sector contractors as humanly possible. Honestly hasn’t anyone ever told them that you can’t get blood from a stone?

 

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