Tory Party promises to abolish IR35

Graeme Wearden ZDNet.co.uk

Published: 11 May 2001 16:43 BST

While IT consultants try to work out how the recent high court ruling on IR35 affects them, the Conservative Party has vowed to abolish the controversial tax if it wins the coming General Election.

IR35 was introduced by the government in April 2000, and has been heavily criticised in some quarters. It treats many self-employed contractors as full-time employees, and government officials say it will help prevent the practice of dodging National Insurance and higher tax by setting up as an independent company.

But critics of IR35 say it will drive thousands of IT consultants overseas, and some believe it will have a devastating effect on the UK's high-tech economy. Back in February shadow secretary of state for trade and industry, David Heathcote-Amory, slammed IR35, which he claimed was "a sly measure" which showed that the Labour government did not appreciate the important role played by contract workers in the IT sector.

Now, in its manifesto, the Conservative party has vowed to find a better way preventing tax evasion. "We will repeal the tax on IT consultants, the notorious IR35, which has driven away from Britain some of our most productive workers," the document reads, adding "We will replace it with targeted anti-avoidance measures."

The Professional Contractors Group forced a judicial review of IR35, claiming that it unfairly penalised small businesses and restricted the free movement of workers around the European Union. The judge hearing the case criticised the Inland Revenue's implementation of IR35, but did not overturn the tax.

Take me to ZDNet Enterprise

Have your say instantly, and see what others have said. Click on the TalkBack button and go to the ZDNet News forum.

Let the editors know what you think in the Mailroom. And read what others have said.