What does IR35 mean for the UK as a whole?
There are opposing views on what IR35 has meant to the UK. One position is that the legislation is another stealth tax that is stifling the UK′s ability to be competitive by imposing yet another administrative and tax burden on business.
However, the addition of significant extra tax and National Insurance revenues into the public sector can only be a good thing benefiting the whole economy, according to another typical position. It is pointed out that those affected by IR35 would – had they not used a tax avoidance scheme like an intermediary – have been paying correct and fair levels of tax and National Insurance Contributions anyway.
As a result of IR35, a new breed of employment benefits companies, like Tarpon, has been created. Those that are legitimately working with HM Revenue and Customs, and have the documentation to prove it, have developed a legal win-win situation for contractors and the Treasury alike:
- Through HM Revenue and Customs issuing Dispensations, like the one held by Tarpon, contractors can legally claim for a range of business expenses, legally reducing their tax burden
- Contractors are still paying a fair rate of tax which is taken at source through PAYE, providing additional revenue streams for the Treasury to make available for public sector investment
- Contractors and HM Revenue and Customs inspectors know exactly where they stand in terms of employment status and IR35 is simply no longer an issue.
The main organisations affected by IR35 are listed below; click on them for further explanations:
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