Prominent Conservative MP David Davis has called on the government to scrap IR35 legislation, citing the impact that the rules have had on small businesses in the UK. Davis, the former Brexit Secretary and sitting MP for Haltemprice and Howden, has been a long-time critic of the reforms.
Writing in the Telegraph, Davis said that the next leader of the Conservative Party – who will become Prime Minister when Boris Johnson leaves office – must scrap “all increases to personal taxes”. Davis said this included both IR35 and the recent increase in National Insurance Contributions made under former Chancellor and Tory leadership candidate Rishi Sunak.
Regarding IR35, Davis said that the policy, introduced in the private sector in April 2021, is “causing huge damage to small businesses in every part of the UK”. IR35 reforms have come under renewed scrutiny recently due to the impact they are having on small businesses amid other pressures such as rising inflation.
Davis’ opposition to IR35, along with other forms of personal tax, is well-established, with the MP having warned the government against extending the rules to the private sector. The reforms were brought into force last year having been delayed for 12 months due to the impact of COVID-19 on the self-employed workforce when the rules were initially scheduled to be introduced in spring 2020.
However, despite this delay from the Treasury, Davis called for a longer wait before they came in, having proposed an amendment to the Finance Bill which would have pushed the introduction of the rules back by two years.
Despite widespread criticism of IR35 rules prior to and since their implementation, HMRC has insisted that the reforms have successfully made the tax system fairer.
In his article, Davis called for wider tax cuts, which he argued would help to boost growth and lessen the effects of the cost of living crisis.
