An article in the Private Eye says that the Government is cutting back on the number of Tax Inspectors and the main areas of tax expertise where they are making the biggest cutbacks is in Tax inspectors with IR35 expertise and in the area of small limited companies.

Private Eye says the Government is being penny wise, pound foolish. Will the Private Eye have us believe that the Government is not bothering to collect tax of £240m.

Will the Government do something so stupid?


A Different Suggestion

I think a better guess is that the Government is giving in to the challenges faced in  collecting IR35 tax.

Constant sparring with IT Contractors, who are often funded and helped by the Professional Contractors Group when hounded by HMRC for IR35 tax, is tiring the government out.  The fact that  more and more IT Contractors are now going into IT Umbrella Companies, may also be a good enough reason for it to retract.  


Bean Count

Have the Government and HMRC come to the conclusion that pursuing small limited companies for IR35 tax does no make sense as the costs are too high for the returns. Have they decided that they would get better returns by chasing the bigger companies,

Have they been carrying out a bean count or a Cost / Benefit Analysis?
 

Isn’t it very natural to wonder that the government which started out with ambitious  IR35 tax targeting IT Contractors, is on a cutback exercise instead of pouring more Inspectors in.

Is this  a sign that the Government and HMRC are accepting defeat over IR35?