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IR35 UPDATE

Mephisto Waltz Article

Judicial review over - IR35 stays!

APRIL 2001

CONTENTS
PAGE 1 - -	Latest News Background
PAGE 2 - -	Why Did the Government fight the judicial review? Why a review of arrangements is worthwhile
PAGE 3 - -	Example of a basic calculation The Judicial Review
PAGE 4 -	IR35 Tax Tips
*BACKGROUND* The IR35 provisions (so named after the budget press release in 1999 in which they were first introduced) were intended by the government to address their concerns that tax was being �evaded� by individuals ceasing employment one day and returning as a contractor with their own limited company the next.

*�Inland Revenue to be sympathetic and cooperative�*

The actual legislation however affects a far greater range of people and all organisations providing services rather than goods should be considering whether it has an impact on them. The rules do not normally affect sole traders but do apply to companies and partnerships.

LATEST NEWS

As has been publicised widely in the press the Inland Revenue unfortunately won the day in the judicial review earlier this month. Leave to appeal further was also refused and so the basic legislation for IR35 stays.

There was however some helpful guidance and comments from Justice Burton regarding the way in which status reviews should be carried out by the Inland Revenue.

After an initial period, of simply enjoying their win, the Inland Revenue have now undertaken to rewrite whole sections of their Internal manual.

At present it remains to be seen if the Inland Revenue action all the comments and are "sympathetic and cooperative" as Justice Burton recommended. Further legal actions by individuals are expected��.watch this space .

In the meantime there are still technical faults in the underlying legislation and oddities in the calculations which have an impact on the structure of tax planning .

At CONDIE & CO our continuing aim is to keep our clients informed of developments and to lead them through the "IR35 MAZE"

The IR35 Maze

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