Liz Truss has pledged to review IR35 tax legislation should she become the next Prime Minister of the UK.
IR35 came into effect for the private sector last year, with a major impact upon the oil and gas sector which relies upon the contractor workforce.
The legislation is in place to prevent workers from disguising themselves as self-employed in order to pay less tax.
However the changes have been derided by many factions of the contractor community.
In an interview with The Sun, Liz Truss pledged to review the IR35 rules.
She said: “The changes that have been made to IR35 are all about trying to treat the self-employed the same as big business.
“But the fact is, if you’re self-employed, you don’t get the same benefits as being in a big company. You don’t get paid holidays, you didn’t get those benefits. So the tax system should reflect that more.”
Responding, Seb Maley, CEO of insurance provider Qdos, said it is a step in the right direction.
“It’s widely accepted that the IR35 legislation and the way HMRC enforces it is fundamentally flawed. Liz Truss must make a review a priority if she becomes Prime Minister. But this mustn’t be lip service or a tactic to win the votes of contractors for whom IR35 remains a massive issue.”
There have previously been reviews into IR35 with little or no action, Mr Maley said, so contractors may take this “with a pinch of salt”.
He added: “Any review of IR35 needs to be independent and far-reaching. HMRC’s very own IR35 status tool is unreliable and inaccurate, which is a major risk to compliance. While the legislation is forcing genuinely self-employed contractors into zero rights employment – a situation where they pay tax as employees but don’t receive any employment rights in exchange.”
Since April 6 2021 the responsibility has been on companies to decide whether a contractor constitutes a full time employee or is indeed self-employed.
If they are deemed to fall within the first category, they have to pay the same amount of tax as a regular employee.
One union boss previously said he had spoken to some offshore contractors that have lost more than half their last wage due to the reforms.
Data released earlier this year from insurance firm Kingsbridge showed around three quarters of businesses and recruiters reported that they had seen a reduction in their personal service company (PSC) contractor workforce following the legislation.
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