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HMRC gathered an annual average of just £1.5 million in IR35 tax revenues over a six-year period, official data shows, leading to renewed criticism of the legislation and calls for its abolition.
The Government figures – which were made public following a Freedom of Information Act request by the Professional Contractors Group (PCG) – reveal that between 2002-03 and 2007-2008, IR35 directly raised £9.2 million, a number far below the £220 million that the measure was originally predicted to earn per annum in National Insurance contributions alone.
The PCG said that £1.5 million was ‘a tiny sum in Governmental terms’ and proved that ‘IR35 has not lived up to… expectations’.
‘Given the cost of enforcing it and the number of failed investigations for HMRC, it may even cost more to implement than it actually brings in,’ said PCG managing director John Brazier remarked.
‘This is a ludicrous state of affairs. IR35 restricts the flexibility of the labour market and is difficult to enforce. It should be abolished at the earliest opportunity.’
IR35 has long been derided for forcing freelance workers to prove ‘unworkable’ tests of employment status.
John Brazier said: ‘We believe there is more to be uncovered from HMRC… we will find out the true costs of IR35 and expose the wildly inaccurate premise on which it is based. PCG now has an even stronger case to make for IR35’s abolition, which politicians of all parties cannot fail to ignore.’
