Still time to call a halt on this damaging
tax legislation
From:
Mr Digby Jones, CBI
Mr Ian L. Handford, FSB, and
Mr Gareth Williams, PCG
To:
Letters Page, Financial Times.
7th July, 2000
Sir,
As representatives of industry and small business, we
would urge the government to reconsider the IR35 measure,
currently before parliament in the Finance Bill 2000.
This legislation, which will treat small businesses as
employees for tax and NIC purposes, will prove detrimental
to the small business sector, the knowledge-based economy
and the UK's drive to lead the world in high technology.
The legislation will also discourage entrepreneurs to remain
UK-based tax payers.
While we support the government's attempts to create a
fair taxation system and support measures to crack down
on blatant abuse, the IR35 provision is unfair, poorly targeted
and ultimately unworkable. We would call on this government
to draw a halt to this, while there is still time to do
so, and to consider a better way forward.
Digby Jones, Director-General, Confederation of British
Industry; Ian L. Handford, National Chairman, Federation
of Small Businesses; Gareth Williams, Chairman of The Professional
Contractors Group.
Scanned
copy of letter in Financial Times
In addition to the letter the FT ran the following article:
Business in plea over tax rules for IT consultants
by Rosemary Bennett, political
correspondent
Business groups have joined forces for one last push to
persuade the government to change its mind over the IR35
tax rules covering information technology consultants.
A joint letter from the Confederation of British Industry,
the Federation of Small Businesses and the Professional
Contractors Group in today's Financial Times urges Ministers
to halt the measure, which they say will damage efforts
to build a world-beating high-technology economy.
"This legislation, which will treat small businesses as
employees for tax and National Insurance purposes, will
prove detrimental to the small business sector, the knowledge-based
economy and the UK's drive to lead the world in high technology,"
the letter says.
"The legislation will also discourage entrepreneurs to
remain UK-based taxpayers. Whilst we support the government's
attempts to create a fair taxation system and support measures
to crack down on blatant abuse, the IR35 provision is unfair,
poorly targeted and ultimately unworkable."
The final pieces of legislation covering the changes are
passing through parliament in the Finance Bill.
Ministers are adamant the measures are necessary to plug
a loophole.
"The Government is pushing ahead with this and we are not
going to be put off by threats that workers will go abroad,"
said one official. "There is not a great deal of evidence
that this is happening and other countries have their own
legislation closing the loophole."
Under the new rules, consultant contractors whose work
patterns are judged to be those of an employee rather than
a 'genuine' contractor will have to pay normal income tax
and national insurance contributions.
Although the Government has dismissed talk of a high-tech
'brain-drain' of IT consultants, it has issued more work
permits to computer experts from overseas. The Conservatives
have promised to make the IR35 change and other new commercial
taxes the centrepiece of their attack on Labour as anti-business
at the next election. They have promised to reverse the
change, which they describe as a 'new wealth tax on entrepreneurs.'
Scanned
copy of article in Financial Times
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