IT contractors safe from tightened tax laws

The Treasury has rejected claims that IT consultants running genuine businesses will be hit by a crackdown on tax avoidance and evasion at managed service providers.

Treasury minister John Healey told a Commons debate on the Finance Bill last week that reputable workers will not be affected by new legislation.

‘If someone is genuinely operating on their own account and essentially running their own affairs and engaging labour through a managed service company, they clearly will not be caught by the provisions,’ he said.

Healey’s statement followed a claim by shadow finance spokeswoman Theresa Villiers that the new measures will particularly hit the IT industry by imposing ‘unreasonable new administrative burdens’ on the freelance and contractor community.

Villiers says the plan treats one-person companies as if they are tax dodgers.

Liberal Democrat shadow chancellor Vince Cable told MPs that the IT contractor industry will be primarily affected, despite its importance to the economy and to the delivery of technology programmes.

The government aims to catch firms supplying contract workers falling within the definition of staff, without collecting tax or NI contributions.