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Thursday, 6 April, 2000, 14:44 GMT 15:44 UK
Brown attacked over IT 'stealth tax'
A tax return
New tax: IT professionals say it's unfair
Chancellor of the Exchequer Gordon Brown has stood by a new tax which information technology professionals say will lead to an exodus of expertise from the UK.

Responding to challenges over the tax in the Commons, Mr Brown said the it was aimed at stopping hi-tech industry workers such as freelance software developers from exploiting a potential loophole.

The tax, IR35, which came into force on Thursday, means that self employed IT workers will be taxed as members of a company staff and will be liable to income tax and national insurance contributions.

'Under pressure'

The government says that IR35 is aimed at stopping one-person personal service companies being set up solely to dodge the financial obligations imposed on normal firms. But opposition Treasury spokesman Richard Ottaway branded IR35 as another "stealth tax".

"Four weeks ago the Paymaster General Dawn Primarolo criticised this party for standing up against the IR35 stealth tax on Britain's hi-tech entrepreneurs," said Mr Ottaway.

"Will you now confirm you are under pressure to modify your stance on IR35 from the e-commerce tsar Alex Allan and secondly the e-commerce Minister Patricia Hewitt, both of whom are pressing the Treasury to ease up on IR35?

"It's not just this party who says you're wrong, it's your own party as well."

'No evidence'

But Mr Brown rejected the attack, saying that the Conservatives had no evidence to back up their allegations that ministers were split on the issue.

In a reference to Tory treasurer Michael Ashcroft, Mr Brown said: "I've often thought in the last few days that the only tax credit they're interested in is the tax credits for Lord Ashcroft of Belize as he comes back into the country".

"As far as IR35 is concerned we published our measures last April, there was a discussion period and a consultation document, we made our decisions last summer.

"These decisions are the right decisions for this country, it is fair that everybody should pay a fair rate of tax and there should not be tax avoidance.

"It's about time the Opposition supported fair tax as well."

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See also:

21 Mar 00 | Budget2000
No reprieve for dot.com workers
29 Nov 99 | UK Politics
E-petition against tax change
04 Nov 99 | UK Politics
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