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Only the House of Commons can raise
money by way of taxes and the Government, therefore, has
to set its Budget proposals for raising taxes into a Finance
Bill. While tax changes and tax continuations can come
into force with immediate effect new taxes have to be
ratified through Parliament to have permanent effect.
The Finance Bill has to pass through various stages before
it becomes law as the Finance Act and it can be amended
at the Committee stage. However, Finance Bills cannot
be changed in the Lords. The Bill will become final in
late July and the provisions relating to "IR 35" will
be effective from 6 April 2000.
How does it affect me?
The Government's proposals for new legislation
governing the provisions of services via intermediaries,
known as "IR35", affect both National Insurance and income
tax legislation. National Insurance legislation does not
have to be enacted via a Finance Act and legislation has
already been enacted, as a statutory instrument - No 727
Social Security, The Social Security Contributions [Intermediaries]
Regulations 2000, which was passed on 13 March 2000. This
puts into place the National Insurance elements of the
proposals. However, the income tax aspects still have
to be passed as part of the Finance Bill. They are covered
in clause
59 and Schedule
12 of the Bill.
What is the PCG doing?
A draft of the legislation was originally
published in February and PCG raised various issues with
the Revenue at that stage. As a result certain matters
have been clarified or changed. For example, the Bill
now clarifies that if the client and the intermediary
are associated by virtue of being under the control of
the worker, alone or in combination with others, then
the legislation does not apply. The situation where the
worker or the client are not resident in the UK for tax
purposes or if the work is carried out outside the UK
has also been clarified. It is now confirmed that the
worker would not be caught by IR 35 if they would not
have been taxable in the UK had they been an employee
of the client.
Now the Bill has been issued PCG is
monitoring its progress though Parliament. It is briefing
MP's on the key issues, while PCG members are writing
to MP's to try and influence their debate and their decisions.
It is has also taken legal advice on whether the legislation
is contrary to European Law. A leading QC has indicated
that PCG has a good case and our lawyers are working with
the QC to put together sufficient evidence to convince
a High Court Judge that there are sufficient grounds for
a Judicial Review of the legislation.
What Can I Do?
PCG helps its members keep abreast of
developments and target their MP's with letters setting
out key issues. By keeping up pressure on MP's by way
of lobbying and letters we can ensure that the Government
with its large Parliamentary majority, nevertheless recognises
the strength of feeling on IR 35 and the potential damage
IR 35 can do to its image and reputation. |