The IR35 Tax Proposal: Thanks to Hewitt And Allan 5th April 2000

Sender: dhd
Date: Wed, 05 Apr 2000 14:25:24 +0100
Organization: ExNet
To: tlo.hewitt@tlo.dti.gov.uk, e-envoy@open.gov.uk
Subject: IR35: thank you


Dear Ms Hewitt, Mr Allan,

I note from the attached Business Day article that you appear to be
applying pressure to review or remove IR35: thank you.

Please note that already I have had to apply the following unhappy
restrictions to my bona fide consultancy, at least in part because of
IR35's blunderbuss approach:

 1) Allow to lapse a successful 4-year consultancy with a major US
investment bank.

 2) Inform all potential new clients that I cannot take on full-time
work to concentrate on a project for them (and assign other ExNet work
to others) other than for the very shortest intervals.  This
significantly restricts the work I can usefully do, eg to help clients
through temporary staff shortfalls or at project startup.

 3) Actively pursue the consultancy markets outside the UK, specifically
in South Africa and on the US West Coast.

 4) Actively consider terminating our ISP, one of the very first in the
UK and created explicitly to open up the UK market then in the grip of
some rather ugly anti-competitive practice.

Please bring IR35 to a speedy end so that I can plan for my business and
stop these damaging distractions and changes.

Regards,

Damon Hart-Davis
MD, ExNet Ltd
-- 
            Work: dhd@exnet.com       http://www.exnet.com/
            Idle: d@hd.org                 http://d.hd.org/
            Photo Gallery:  http://www.hd.org/Damon/photos/
            KVM FAQ:                  http://kvm.exnet.com/

Encl: article.

Response from Patricia Hewitt 3rd April 2000, by e-mail

Subject: RE: IR35: thank you
   Date: Wed, 3 May 2000 17:01:57 +0100
   From: Hewitt MPST <TLO.Hewitt@tlo.dti.gov.uk&rt;

Thank you for your recent e-mail attaching an article from the Evening
Standard's Business Day section about the IR35 proposals.

I must make clear that my role is not as described in this rather misleading
article. Like my predecessor at DTI, Michael Wills, I have taken a close
interest in the IR35 proposals because of this Department's responsibilities
for small firms and for the IT sector. It has been particularly useful that
contractors, such as yourself, have provided information and examples on how
business may be affected by the IR35 proposals. This has enabled me to ensure
that my Treasury colleagues are fully informed on the business issues involved.
Business concerns have already been reflected in the revised proposals
preserving the flexibility offered by personal service companies and in the
extensive guidance provided by the Inland Revenue.  However, this does not mean
that I have been 'pressing the Treasury to ease up on IR35'. Nor is there a
prospect of a 'tax climbdown' as described in the article. 

We are committed to having a fair tax system. It is clearly unfair that someone
using a personal service company and carrying out the job of an employee can
avoid paying tax and NICs altogether, when an employee on the same salary pays
their share. It is this principle on which the IR35 proposals were developed
and there will be no climbdown from putting an end to a damaging method of tax
and NICs avoidance.



Best Wishes



PATRICIA HEWITT



IR35 index.

Damon
Site content copyright Damon Hart-Davis 1997--2000 unless otherwise stated.