IR 35, known as the intermediary’s legislation, was first announced 10 years ago in March 1999. The controversial legislation led to many tax cases and still is one of the most contentious areas in legislation.
One case, Larkstar Data Limited, has been referred back the General Commissioners for a re-hearing after the owner of the company faced an appeal in the High court.
To a certain extent, subsequent legislation passed in the last year or two, particularly relating to managed service companies, was an admission by the government, albeit in a covert way, that the IR 35 legislation hadn’t worked properly.
I understand the thinking behind the legislation both originally and the subsequent changes attacking Managed Service Companies. However, as an ardent supporter of small business, I can’t help thinking that the same tax yield could have been achieved by attacking certain other sectors and the subsequent administration would have been far less onerous. In the years when banks, hedge funds, oil companies and other large corporates were making almost obscene profits, a ‘supertax’ on them would have been just as effective. Of course, that would have meant taking on ‘big business’ and successive governments have shied away from such battles.
Anyway, ten years on, you do have to wonder whether IR35 achieved very much at all.