Government to review IR35

The Chancellor has promised at his speech during the CBI dinner that the government will review the (unpopular) IR35 legislation as part of a “wholesome review of small business taxation” and it will seek to replace it with simpler measures. These plans “will prevent tax avoidance but will not place undue administrative burdens or uncertainty on the self-employed or restrict labour market flexibility”.

(Our comment: let’s hope simplification is not used again to tax self-employed even more!)

Chancellor to deliver emergency Budget

The Chancellor has announced that the coalition Government’s emergency Budget will be delivered on Tuesday, June 22. The Budget will lay out the specific measures to tackle the UK’s deficit.

IR35 - Taxman loses in the Novasoft case

The taxpayer’s appeal was allowed in full by the Commissioners against the HMRC. The tribunal decided that this was a case of “self-employment” and therefore the dreaded IR35 legislation (intermediary companies) did not apply. In reaching it verdict the tribunal quoted the Hall V Lorimer, that it is necessary to “paint a picture from the accumulation of detail”. It will be interesting to see if HMRC takes this case to further appeal although it will be more interesting to see what impact this case will have on the IR35 legislation.

(Note: IR35 is a complex set of rules introduced to catch disguised employees falsely trading through their own limited companies to reduce their tax. The problem lies in its complexity itself and in that it has in some cases it has unfairly treated genuine self-employed).

Taxman seeks access to accountants’ working papers

Government consultation on “Tax agents and deliberate wrongdoing” has been met with outcry by the accounting profession. They fear that the controversial government proposals will lead to deterring tax advisors from offering legitimate tax advice to clients for fear of opening themselves to prohibitive fines and investigation for assistance to unacceptable tax avoidance. Under the proposals, the HMRC will have access to accountants’ working papers.

(Our comment: we can’t help it thinking that this is another attempt by the taxman – following removal of legal privilege - to increase its take by restricting the taxpayer’s ability to influence the amount of their tax through legitimate tax planning by using accountants’ expertise).