Question to the HM Treasury:

To ask Mr Chancellor of the Exchequer, what recent assessment his Department has made of the use of personal service companies as a means of tax avoidance; and if he will make a statement.

This Government is committed to tackling tax avoidance and evasion at all levels to ensure everyone pays the right tax at the right time. Avoidance (and evasion) damage the ability of the tax system to deliver its objectives and impose additional costs on all taxpayers.

Personal Service Companies are not in themselves avoidance vehicles and contribute to the flexibility of the UK labour market. However, where people would have been employees if they were providing their services directly IR35 anti-avoidance legislation requires they pay broadly the same tax and National Insurance as other employees. HMRC takes a risk based approach to ensure these rules are complied with.

HMRC has improved the way in which it administers IR35 including strengthening its specialist compliance teams, increasing the number of investigations where IR35 is the main risk tenfold and clarifying the application to officeholders.