UK tax expert David Redfern today criticised the lack of clarity surrounding the controversial HMRC IR35 tax legislation. His comments come as HMRC have ruled against former BBC presenter Christa Ackroyd, resulting in her owing HMRC in excess of £400k due to the legislation being misinterpreted by her Personal Service Company. Redfern, a leading UK tax preparation specialist and founder of DSR Tax Refunds, stated that the HMRC legislation is unclear and open to misinterpretation, leaving many self-employed and freelance workers at risk of falling foul of the IR35 rules.
Redfern stated “I have been a firm critic of HMRC’s IR35 legislation due to its complex nature, potentially leaving thousands of freelance and self-employed workers at risk of severe financial penalties and unpaid tax bills. This latest case took five years to adjudicate, demonstrating just how complicated and unwieldy
this legislation is”. He added that he had warned against the use of Personal Service Companies in the past due to the very real risk of misinterpreting IR35 legislation, which is intended to stop people falsely claiming to be self-employed and thus claiming advantageous tax breaks which they wouldn’t be entitled to as a PAYE (pay as you earn) employee.
Redfern stated that “for Ms Ackroyd, the consequences of coming into conflict with these complex and often bewildering rules have been severe, with the loss of her job and a bill for unpaid tax running into hundreds of thousands of pounds but freelancers and subcontractors shouldn’t be complacent in thinking this couldn’t happen to them”. He noted that it was correct that HMRC crack down on those who are wrongly claiming tax advantages to which they are not entitled but argued that the legislation is not fit for purpose. He stated that “considering that Ms Ackroyd isn’t the first BBC star to fall foul of these regulations, with all of expert advice that the BBC is able to offer its presenters and actors, this suggests that the legislation is far too complex for your average freelancer or subcontractor to be able to navigate alone and should therefore be revisited and possibly revised for clarity”.
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