Government will look again at IR35 plans

The government has said that contractors' service companies are an 'abuse' of tax rules, but is continuing to hint that it may revise its proposed IR35 changes.

During a house of Lords debate, it gave a clear guarantee to consider the effect of the new rules on self-employed workers. The Lords were debating the IR35 proposals to change tax laws, intended to end avoidance of tax and National Insurance contributions.

Lord McIntosh of Haringey specifically refused to promise any changes to the wording of the new National Insurance contributions rules in Clause 70 of the Welfare Reform and Pensions Bill. That clause was inserted to pave the way for IR35, and could become law this year.

However, under pressure from Conservative and Liberal Democrat Peers, he did hold out the prospect of some reconsideration.

He said that there had already been consultations and there would be more before further progress is made on the bill.

'I am not making any promises, but there may be modifications to Clause 70 as a result,' he said.

'However, we shall not retreat from the position that the intervening service company is an abuse of tax and National Insurance legislation.

We have to find some way of dealing with that,' he added.