7Apr '14

House of Lords Report on Personal Service Companies

The House of Lords has today published its report on an investigation of the tax treatment of freelancers working through their own limited companies (like me). It’s not the disgusted-from-Tunbridge-Wells style condemnation of evil tax dodgers that some people would have wanted, but a considered argument for reform of the IR35 legislation that was (in my opinion) hastily-written and poorly thought out. They also acknowledged that while abuses can and do happen, freelancers who work in this way forego employment benefits like sick pay, holiday pay, and any semblance of job security, while making a very significant contribution to the economy.

I would summarise their report as “the situation is a mess and HMRC aren’t being clear about anything”. They said (and this is a direct quote from the Lords’ report), “We were surprised by the lack of co-operation from the Government.” Based on that, the Professional Contractors Group have called for the immediate suspension of IR35.Given how much time I have to spend ensuring not just that I’m compliant with it, but ensuring that I can *prove* that, I’d love to see that happen (although there is a ‘better the devil you know’ argument there).

Personally, I’m just relieved that the Lords’ report isn’t a wholesale condemnation of freelancers like me who work hard and pay every penny of tax they are required.


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