Political Monitor
Excerpt from APSCo Political Monitor
Early Day Motion: IR35 Tax
Lorely Burt, Liberal Democrat small business spokeswoman
Don Touhig, Labour
Sir Robert Smith, Liberal Democrat
Mark Durkan, SDLP
Peter Bottomley, Conservative
Bob Russell, Liberal Democrat
Tabled the following motion:
That this House notes with concern the Government's implementation of IR35; further notes that the 1.4 million freelancers in the United Kingdom face a perpetual threat of a costly and distressing HM Revenue and Customs investigation under IR35; further notes that IR35 obliges freelancers to spend time and money assessing their status as best they can, with contract reviews, tax investigation insurances and negotiations with clients and agencies, and that this effort would be better spent generating wealth for the UK economy; highlights concerns expressed by the Professional Contractors Group (PCG) that almost all cases known to PCG have resulted in no extra tax being owed; further notes that there is no evidence that IR35 is raising any money for the Exchequer; and calls on the Treasury, in light of the current economic difficulties, to remove unnecessary barriers to enterprise and to abolish IR35 at the earliest opportunity.
Service sector growth hits 'three-year high'
The service sector in the UK grew at its fastest monthly pace in three years in February, providing further evidence of the economy's recovery. The Chartered Institute of Purchasing and Supply (CIPS) index rose to 58.4 from 54.5 the previous month, its highest since January 2007. The index allayed fears among some economists that the UK could slip back into recession in the current quarter. The service sector is a vital component of the UK economy. Any index score above 50 indicates growth.
CIPS said that job losses in the sector had slowed, while expectations among businesses remained positive: "Though the VAT change and rising fuel prices continue to make their mark, service providers are feeling confident enough to raise output prices to partially offset this," said CIPS chief executive David Noble.
Revised figures showed that the UK economy grew by 0.3% in the final three months of last year, faster than previously thought. An important reason for the upward revision was the strong performance of the service sector, where output rose by 0.5% between October and December, up from a fall of 0.3% in the previous quarter.
VAT was raised to 17.5% at the start of January after a temporary reduction to 15%. There are concerns that this, together with the decision taken last month by the Bank of England to stop pumping money into the economy, could hamper economic growth.
But Vicky Redwood at Capital Economics said: "The survey will ease concerns that the economy may have fallen back into recession this quarter." Areas covered in the services sector include transport and communication, financial advice, computing and IT, and hotels and restaurants.
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