Review Of Employment Status leaves IR35 unaffected

The Office of Tax Simplification has confirmed that their review of employment status leaves IR35 unaffected, at least for now.

The OTS confirmed that IR35 was ‘strictly outside’ its scope for the employment status review and that as the PSC Committee and IR35 Forum have already reviewed it, IR35 was specifically excluded from their document’s terms of reference.

The OTS have, however, reminded its stakeholders that a solution to the IR35 issue is required, however, those freelancers and interested parties who feared a change to the legal landscape will be relieved that none has immediately been recommended.

In fact, the OTS has stated that its recommendations are no quick fix and that almost all of them are ‘long term’ and require further work after Budget 2015. The OTS also acknowledge that Employment Status is a complex and wide ranging subject with no easy solution identified in its report, whether related to definitions of employment status or indeed the tax and other issues related. The recommendations do include a ‘full review’ into the taxation of small businesses, including limited companies, partnerships, LLPs and sole traders/

The OTS reflected: “We have not found the tax equivalent of the philosopher’s stone that will suddenly transmute all the base problems into shining clarity.

“We have certainly proved there is a problem and set out why – and established that there is a real need to improve the situation.”

If you require advice as to your small business, our accountancy services can help.  Contact us today for more advice on 0207 164 2116.