Dan Jarvis – 2016 Parliamentary Question to the HM Treasury

The below Parliamentary question was asked by Dan Jarvis on 2016-01-12.

To ask Mr Chancellor of the Exchequer, whether the Government plans to introduce a one-month time limit on engagements for (a) small business and (b) other limited company contractors before they are treated as employees for tax purposes.

Mr David Gauke

Where people would have been employees if they were providing their services directly, the intermediaries legislation (known as IR35) requires that they pay broadly the same tax and National Insurance as other employees.

The Government estimates that currently only around 10% of people who should pay tax on at least part of their company’s income under these rules do so. This non-compliance is both unfair and estimated to cost over £400 million a year. The Government is therefore looking to improve the legislation in a way that protects the Exchequer and improves fairness. However, it is not the Government’s intention to widen the scope of the rules.

The Government published a discussion document on 17 July 2015 that set out the issues in more detail and invited views on options for reform. The discussion period closed on 30 September and the Government will announce next steps in due course.