Tax Expert Blasts IR35 As Not Fit for Purpose

2 mins

UK taxation legislationOne of the UK’s leading tax experts today blasted the IR35 taxation legislation as “not fit for purpose”. Tax preparation specialist David Redfern, founder of DSR Tax Refunds, commented on Tuesday’s Digital, Culture, Media and Sport Select committee into the BBC’s use of freelance contracts for presenters, stating that IR35 needed to be overhauled before it could be considered to be a fair piece of taxation legislation.

On Tuesday Parliament heard testimony on Tuesday from several BBC presenters, including Kirsty Lang and Liz Kershaw, that the BBC forced presenters to form Personal Service Companies (PSC) in order to retain their contracts allowing the BBC to avoid employer costs, including employer’s National Insurance contributions. Redfern noted that the IR35 legislation needed to be completely rethought before its rollout to the private sector, now expected to occur in April 2019. He stated that “the current woes of a large number of BBC presenters as a result of HMRC cracking down on PSC’s are indicative of just how inadequate this legislation is and the fact that there are still over 100 cases to go before HMRC from BBC presenters alone highlights this inadequacy”. He noted that freelancers and contractors with public sector clients, including those who work within the NHS and the IT industry, were at risk of being involved in the HMRC clampdown and highlighted the BBC’s Kirsty Lang’s description of HMRC’s CEST (Check Employment Status for Tax) tool as “not fit for purpose” as an example of the defective nature of IR35 legislation. He stated that “the very fact that the HMRC’s own tool to help workers to determine their employment status is in itself ineffective is indicative of just what a mess this legislation is”.

Redfern noted that whilst the BBC were seeking to blame limited company accountants for the financial situation their presenters were currently embroiled in, he added that many freelancers and contractors in the gig economy didn’t have access to expert advice to help prevent then from falling foul of the legislation. He stated that “I have long campaigned against this legislation on the grounds that it is unworkable in practice and the current situation with the BBC highlights this. I urge HMRC to revisit this legislation as a matter of urgency prior to it being rolled out across the private sector next April to prevent financial chaos for many thousands of freelancers and contractors”.

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