Tories pledge to review IR35 tax legislation

IT contractors were dealt a blow when IR35 was introduced, but Tories have pledged to change that

The Conservative Party announced last week that it plans to review the controversial IR35 tax legislation if it gets into power after the 6 May general election.

The IR35 legislation was introduced by the Labour government in 2000.

HM Revenue and Customs said that IR35 was introduced to prevent an individual avoiding tax on payments for services by providing those services through an intermediary.

Many self-employed IT contractors who were previously trading as " independent companies" were particularly hard hit by IR35. As well as claiming they would no longer benefit from tax breaks on travel or training, many said they would have to quit IT contracting altogether and find more lucrative work.

The Conservatives claim that IR35 has cost business £73m over 10 years but has barely raised any revenue for the Treasury.

Shadow business minister Mark Prisk criticised Gordon Brown for making it harder to be self-employed at a time when Britain should be open for business.

"For the last 13 years, Labour have constantly meddled with the tax rules for freelancers and self-employed,” he said. "IR35 has especially proved to be over-complex, uncertain and often unfair."

He said that a Conservative government would undertake a fundamental review of current arrangements with the aim of providing a “clearer, lasting and fairer tax regime”.