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E4.1025A Background to IR35

In the March 1999 Budget, the Chancellor of the Exchequer announced anti-avoidance measures to target the avoidance of tax and NIC by individuals providing their services through an intermediary such as a personal service company or partnership. The proposals were announced in Revenue Press Release IR35¹ and have become widely known as 'IR35' after the press release number. For the sake of convenience, the term 'IR35' is adopted throughout this Division.

Following a period of consultation, the tax proposals were enacted in FA 2000². They were subsequently rewritten, with minor amendments, as part of the Tax Law Rewrite Project, in the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003)³ which came into force from 6 April 2003. Corresponding NIC provisions are found in the Social Security Contributions (Intermediaries) Regulations 2000⁴. The equivalent Northern Ireland NIC provisions are contained in the Social Security Contributions (Intermediaries) (Northern Ireland) Regulations 2000⁵.

When the proposals were first announced, the accompanying press release explained that the intention was to prevent