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IR35

Comment 30th July 2010

 

Change IR35 to encourage individuals to trade independently. This regulation applies  to people working as so-called consultants or contractors. The Revenue automatically assumes  these specialists are an employees of the Company to whom he/she is contracted to, thus making self-employment impractical

Why does this matter?

 

Why Should This Be Important?

Technology has changed radically with Firms often having to fulfil an order for one particular system which requires one type of specialist effort for (say) six months. By discouraging self-employment, such temporary effort has been made more difficult to arrange and further complicated by employment Law. Other similar EU Laws limit the number of hours an individual is able to work, especially in Germany. But that is a nonsense when a Company is fighting against time, often facing the prospect of a penalty clause for late delivery when only the specialist team can apply effort in solving outstanding problems. These provisions make employment of the right types of labour inflexible. Companies ought to be able to buy in temporary labour and to allow overtime working where appropriate

 

Does this Matter?

While travelling shortly after IR35 had been introduced, I met a woman who explained that she now worked on the Frankfurter Borse, having left the London Stock Exchange because of IR35. She added that her husband was also working in Frankfurt and that they were both top-line information technologists. The London Exchange, she assured me, was dropping behind in software capability  when compared with Germany. This was because of IR35. I suspect that some of that draconian Law has been implemented by Labour at the behest of the Unions, who are the biggest destroyer of jobs that Britain has ever experienced. There are many other examples of individuals or husband and wife partnerships who have emigrated due to this infamous regulation.

Conclusions

The United Kingdom must join the battle for technological success that China and the Far East appears to be winning at this time. To fight back, we all need good industries, good research,  flexible work forces and freedom from punitive taxes on productive activities.. Independent contractors  in UK have been continually assaulted by ever increasing tax law. The freelancer was virtually banned, individuals have been banned from operating Limited Companies, allowable  expense claims have been systematically withdrawn from independent contractors (Ironic in the light of THE expenses scandal). The Alliance would do well in bolstering the Private Sector (some might  prefer the term ‘Productive Sector’) and to free innovation and creativity from the many State controls that now hamper them. If our industry continues its downward trend, then repeal of IR35  will not be important, otherwise it will be vital in the fight back. One freelance software specialist could earn for more wealth towards solving the deficit than a thousand public servants

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