The Conservative Party has announced that IR35 will be reviewed as part of an overall review of small business taxation if they win the General Election in May.

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.

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

The Conservatives add that they would set IR35 as a priority for a newly established Office of Tax Simplification. This body will be made up of tax experts with whom PCG would work closely.

Prisk adds: “…we recognise and value the contribution of freelancers and we are well aware of the way in which the current government has treated them. We want to deal with this problem comprehensively, in a way which provides us all with a lasting solution, not a short term fix.”

Bryce says: “This shows that the Conservative Party has been listening to and understanding the messages that PCG has given them. We believe this solution has the potential to lead to a fairer and more workable tax regime for the vast majority of those who work freelance.

“PCG, however, will not be complacent. It will continue to make the strongest possible representations to any government of whatever colour after the election to remove IR35 which is a grossly unfair and badly drafted piece of legislation.”