The Professional Contractors Group (PCG) has called on the government to explain why IR35 was retained after it yielded just £220,000 in the last tax year.
HMRC admitted, in response to a freedom of information request, that IR35 status enquiries fell from 158 in 2006/2007 to 23 in 2010/2011. The tax yield also highlights a dramatic reduction from more than £1.9m five years ago to £219,180 this year.
John Brazier, managing director of PCG, referred to IR35 as an unwarranted measure introduced by the previous government. He said: “These figures confirm what PCG has always said, that the tax yield from IR35 is minimal and that the stress and damage done to the UK’s 1.4 million genuine freelance businesses is completely unnecessary.
“It is now time for the decision makers to explain more clearly to freelancers and the public why the risk to the exchequer would be simply too great if IR35 was abolished or suspended," Brazier added.
About Robert Lovell
Business and finance journalist