The end of IR35?
Introduced in 1999 to prevent contractors avoiding tax payments through intermediary firms IR35 has been a compliance nightmare not just for small businesses but also for the HM Revenue & Customs, who have spent a fortune trying to bring and win cases against Limited Company Contractors deemed to be ‘Outside IR35’.
Speaking to the Telegraph Mr Prisk said \”More often than not they (the Labour Government) have treated them (Limited Company Contractors) as if they are on the fiddle, which is wholly unacceptable. We want to reform the system,\” He went further by saying “the presumption that self-employed professionals are cheating the tax system must come to an end.”
The Conservatives are thought to be considering the radical option of allowing 600,000 Limited Company Contractors to opt out of employment. Instead of paying 11% Class 1 Employees National Insurance on their salaried income they would pay the Self Employed rate of £2.40 per week in Class 2 National Insurance Contributions. No mention was made of Class 4 National Insurance which the Self Employed must also pay on profits (Class 4 National Insurance is 8% between the lower and upper profits limit and then beyond it is capped at 1%.
Both the Conservatives and Liberal Democrats are though to be sympathetic to the idea of scrapping the expensive and difficult to enforce IR35 legislation. However both parties have stopped short of announcing that they will abolish the legislation, saying rather that they will look into it as part of wide small business taxation reforms. Mr Prisk is a former freelancer who has come out in support of the small business community for a number of years.
At Commonwealth Contractors our partners specialise in looking after highly skilled professionals who operate limited companies, especially those expat consultants currently working in the UK on a Tier 1 Visa (formerly Highly Skilled Migrant Programme).
Many highly skilled professionals who come to the UK are recommended to go into a business with a Contractor Limited Company due to the favourable tax advantages, which include saving 11% Class 1 Employees National Insurance and 12.8% Class 1 Employers National Insurance. However many individuals who choose to go this way find it more difficult to qualify for a Tier 1 General extension after 3 years.
At Commonwealth Contractors we partner with OISC Registered Private Immigration Firms and Tier 2 Licensed Healthcare & IT Consultancies who may be prepared, where required, to sponsor an individual on a Tier 2 Visa (formerly UK Work Permit). Our OISC Registered Immigration Partners specialise in looking after high level professionals on Tier 1 Visa and offering professional Tier 1 application and extension services.
For more information call Commonwealth Contractors now on 0330 390 9021 or Submit your details now and we will get right back to you.