Liz Truss, the current foreign secretary, told the newspaper today [Monday, 22 August 2022] that the controversial IR35 tax rules are unfair as they force genuinely self-employed tradesmen, like electricians and plumbers, to pay too much tax.

In a wide-ranging interview with The Sun on Sunday, Truss said an impending recession can be averted — but only if the next PM acts quickly to unleash the country’s potential.

She promised to usher in a “small business and self-employed revolution” because they are “the future of our economy”, The Sun reported. It went on to quote Truss as saying: “It’s about that level of ambition. There is too much talk that there’s going to be a recession. I don’t believe that’s inevitable. We can unleash opportunity here in Britain.”

Veteran participants in the IR35 debate questioned the usefulness of a review into IR35. Dave Chaplin, CEO, tax compliance firm Contractor Calculator said: “My message to [Liz Truss] is loud and clear: we don’t need another review, we need action. 

“The so-called reforms are a flawed botch and have simply served to strangle contractors and those businesses which hire them. IR35 is an iron shackle, impeding flexible workers who can help deliver growth just when the UK economy and UK plc need them. The time to act is now.

“Over the last 20+ years, there has been considerable misjudged and damaging legislation heaped on the contracting sector, and the sensible option would be to go back to the drawing board and design a fair tax system that works fairly for everybody. Let’s fix it or ditch it.” 

Also commenting, IR35 insurance provider Qdos CEO, Seb Maley, took a slightly milder tone, saying: “Promising a review into IR35 is a step in the right direction. It’s widely accepted that the IR35 legislation and the way HMRC enforces it is fundamentally flawed. Liz Truss must make a review a priority if she becomes prime minister. But this mustn’t be lip service.

“It’s impossible to overlook the fact that we’ve been here before. IR35 has been reviewed multiple times in recent years, yet still the government has taken very little or no action whatsoever. So, you’d forgive contractors and businesses impacted by the rules for taking Liz Truss’s pledge with a pinch of salt.

“Any review of IR35 needs to be independent and far-reaching. HMRC’s very own IR35 status tool is unreliable and inaccurate, which is a major risk to compliance.”

The Sun also quoted Truss as saying: “The changes that have been made to IR35 are all about trying to treat the self-employed the same as big business.

“But the fact is, if you’re self-employed, you don’t get the same benefits as being in a big company. You don’t get paid holidays; you didn’t get those benefits. So the tax system should reflect that more.”

She has also announced plans to scrap the rise in Corporation Tax and National Insurance, and green levies on energy bills, as well to see through PM Boris Johnson’s plan to slice 91,000 public sector jobs in a move estimated to save £3.5bn.

In addition, Truss called for a new “Dad’s Army” of retired doctors, nurses and medical staff to tackle the NHS crisis. She spoke out amid stories of pensioners being forced to wait up to 40 hours for ambulances after falls. Truss told The Sun: “During Covid, we successfully brought people back from retirement to help out. And what I’m interested in is how can we do that now we’re facing these critical issues in the NHS?

“Because [there are] lots of fantastic people who have worked in the health service who could help.”

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