IR35 is to be retained with the government committing to improving the way it is administered, according to Budget documents.

The documents say that following the publication of the OTS review of small business tax, the government will commit to setting up a dedicated helpline staffed by specialists.

The body will publish guidance on those types of cases HMRC view as outside the scope of IR35, will target compliance activity by restricting reviews to high risk cases and will set up an IR35 Forum, which will monitor HMRC’s new approach.

The Budget documents add that the government has decided to retain IR35, as abolition would put “substantial revenue at risk”.

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 [National Insurance Contributions] 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.

Martin Brookson, managing director at contractor services and accountancy firm Brookson, told Recruiter: “We feel that if it had been abolished now it would have left a space without any regulation and there would have been an increase in non-compliance that would have produced a worse answer than IR35 is now.”