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Freelancers are disappointed that IR35 is to remain

Freelancers who’d hoped to see the demise of IR35 in the budget will probably be disappointed to learn that it is to be retained. However, budget documents show that the government has committed to improving its administration.

Following the OTS review, it has been decided to set up a dedicated helpline, which will staffed by specialists, for IR35 related concerns. The government decided that abolishing IR35 would put a significant amount of revenue at risk.

The new body will produce guidance on the sort of cases the Revenue views as outside IR35, target compliance activity and create an IR35 Forum to monitor HMRC's approach.

The REC is disappointed with the decision especially as HMRC has not been able to produce accurate figures on the amount of revenue it brings in.

Head of Public Policy, Gillian Econopouly, said the OTS recommended suspending IR35 rules while other alternatives were investigated and the REC is disappointed that George Osborne dismissed this out of hand.

It is hard to accept that the abolition of IR35 would lead to a substantial loss of revenue when HMRC cannot provide figures on the income it generates. The Treasury should have at least requested a further consultation to find this out and then weigh up the financial impact of the different choices.

The Confederation has already warned that HMRC are having problems keeping on top of its workload and, with further budget cuts on the way, it's hard to see how they can better administer IR35.

The REC believes the Chancellor missed the chance for real, tangible simplification that would have benefited entrepreneurs throughout the UK. A dedicated helpline is no substitute for true reform, she added.

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