Contractor accountancy firm ClearSky Accounting has called for IR35 to be simplified rather than review the legislation, which the Tories have committed to, should they win the election.

Shadow business minister Mark Prisk, in a letter to PCG chairman Chris Bryce, said: “A Conservative government would undertake a fundamental review of small business taxation matters, including IR35.”

IR35 was proposed in the 1999 Budget of the then Chancellor Gordon Brown to target ‘disguised employment’ - workers who receive payments from a client via their own company. These payments are not subject to NICs as they can be treated as dividends, and workers can also save tax by splitting ownership of the company with family members to place income in lower tax bands.

But ClearSky managing director Derek Kelly dismissed the move as “quite blatant electioneering”.

“Contractors, for their part, would end up receiving poorer quality or at least less specific taxation advice, which would have a knock-on effect for their financial circumstances as a whole.

“As a result we would suggest that the Conservatives focus their efforts on simplifying the rules of IR35 and providing the necessary resources and ‘encouragement’ to the HMRC to enforce the rules this legislation more rigorously.”