Contractor tax test deemed ?flawed?

A test designed to help contractors abide by IR35 contractor tax rules has been deemed ‘flawed’ by industry groups.Groups such as the Federation of Small Businesses and the Professional Contractors Group said the guidance on disguised employment rules was “counter productive” and would prevent high-risk cases from being identified.The HMRC test, which is to be piloted over the next year, is intended to make it more straightforward for contractors to identify their tax status. However, a joint statement from business groups which sat on the IR35 Forum said that the guidance “represents greater complexity rather than [the] simplification that had been the Government’s goal”.The group argued that HMRC had missed an opportunity to bring clarity and fairness to the IR35 system and argued that the measures don’t reflect the new approach to IR35 which the Government promised in the 2011 Budget.Martin Hesketh, of the Freelancer and Contractor Services Association, another member of the Forum, is quoted by the Telegraph as saying, “The proposed scoring system ... will push a disproportionate number of businesses into the high-risk category, and in so doing will prevent genuinely high-risk cases from being identified. An alternative scoring system, backed by a majority on the Forum, was suggested but to date those suggestions have been rejected by HMRC.”

http://www.50percenttax.co.uk/index/2012/5/29/contractor-tax-test-deemed-flawed.html