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  • Are Labour to Scrap IR35 Reform?… Should we un-pop the Champagne corks?

    27 November 2019

    Andy Wood

    Labour to scrap IR35 reform… but should we un-pop the Champagne corks?

    Well, well, well…

    Interested to note on a post from Contractor UK that the Labour Party’s Bill Esterson seems to have indicated at a recent contractor event that April’s IR35 reform in the private sector would at least be deferred.

    That must be cause for a celebration. Let’s all toast Mr Corbyn and McDonnell’s benevolence. Champagne socialists after all.

    Of course, there is a very good chance that this ‘pledge’ is not Labour policy and Mr Esterson has over-reached himself. This campaigning can be a bit too exciting at times. Indeed, it certainly is not part of the Labour Party’s manifesto.

    But then, neither was the small matter of £60bn for the WASPI women.

    However, perhaps this is because there is worse in store.

    If one looks at Labour’s Fair Tax Programme in Section 3 the seeds for a bigger issue are certainly sown.

    In Section 3 of this (quite frankly) ludicrous document it reveals:

    Incorporation avoidance

    Tax incentives and changes in criteria for incorporation have led to a rapid increase in the number of individuals self-incorporating. Labour will review changes made in the Companies Act 2006 that allowed single director incorporations, which would make it more difficult to individuals to participate in incorporation avoidance. Labour have also proposed an increase in corporation tax that would make it less lucrative to incorporate.

    Clearly, a ban on single director companies would clearly mean that IR35 was not necessary to prevent the perceived avoidance in this area.

    So, keep the cork’s un-popped and on ice…

    ETC Tax are specialist tax advisers and over the last few years have been assisting contractors with their tax affairs especially in relation to IR35. 

    If you have any queries about this article, or tax matters in general, then please do not hesitate to get in touch.