The government’s launch of the Office of Tax Simplification offers freelancers and contractors hopes of a less muddled and more straightforward tax system. The UK’s tax code is currently 11,000 pages long – so there’s a lot of simplifying to do! However, there are two main areas which the new office will tackle in time for next year’s budget…

The first is a general review into how the tax system can be simplified for small businesses, which will include close scrutiny of IR35, and an attempt to find a less complex alternative. The second area will be a review of tax reliefs and exemptions.

For the small business community, this can only be a positive sign. IR35 has been the bane of many a contractor’s life ever since it came into effect in 2000 as an attempt to stop PAYE employees switching their working status just to save on tax whilst their working arrangements remained identical. Despite having good intentions, the legislation has simply been too complex and has left many legitimate contractors biting their nails worried that they will be caught up in the IR35 net.

PCG (Professional Contractor’s Group) was established in response to the stifling affect of the legislation.

John Brazier, PCG’s Managing Director, said, “We are delighted that the Government has now set up this vital office and that they have already set out the terms of reference for a Small Business Tax Simplification Review, including IR35. The fact that IR35 has been highlighted as a priority is good news. We will be working to ensure that this iniquitous tax will go and that all freelancers and small businesses will be able to operate within a fairer and more transparent tax system.”

The Office of Tax Simplification will be formed of independent tax experts, and their powers will remain purely advisory.