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Paymaster General, Dawn Primarolo, branded consultants as tax cheats during Treasury Questions in Parliament recently.
Paymaster General, Dawn Primarolo, was at the Dispatch Box in Parliament to answer questions on the Government's controversial IR35 proposals, when she claimed that contractors were cheating honest tax payers.
In reply to a question from LibDem MP, Dr Vincent Cable, Ms Primarolo told the House of Commons: "IR35 deals with avoidance in cases in which one employee in a company avoids tax and national insurance. That means that such employees do not pay tax and national insurance, which are paid by other people who are self-employed or on pay-as-you-earn pay. The hon. Gentleman (Dr Cable) should explain why he is prepared to support a group of workers whose companies their own advisers describe as tax havens. Why should they be allowed to continue to cheat honest taxpayers?
At the same question and answer session, Ms Primarolo denied that the e-envoy Alex Allan had raised concerns with the Treasury about IR35, despite newspaper reports of a conference earlier this year, where Mr Allan had referred to this.
Ms Primarolo said: It is not true that the e-commerce envoy has been making representations to the Treasury about relaxing the rules. He made it clear that he supports the Government's policy of stopping unfair tax and national insurance avoidance.
Ms Julia Drown, Labour MP for South Swindon raised the case of one of her constituents who has a small IT business, which he fears will be forced to close down due to IR35.
Ms Primarolo has this advice: " Frightening and undermining the legitimacy of the many hundreds of thousands of legitimate companies that operate as service companies is part of the scare tactics of those who seek to avoid tax by using service companies. The Inland Revenue continues to advise those companies that will be caught by the rules through a helpline and a comprehensive website. We are ensuring that honest taxpayers will be strengthened by the rules, not undermined, and that people compete on skills, not by using the rules only for tax advantage, as the few are doing."
Ms Primarolo's opposite number for the Conservatives, Richard Ottoway MP, accused the Minister of having no idea of the damage that IR35 would cause to the knowledge-driven economy and reminded her that the Government's election manifesto has said that they would give Britain's entrepreneurs and small businesses the backing they deserve.
He also claimed that the 'biggest gaffe' has come from Patricia Hewitt, the Minister for Small Business and E-Commerce, who is planning to use a visit to the United States to woo back British expats who've chosen to work there. He said: "Looking at the chaos caused by IR35, who in his right mind would come back to this mess? It is pain without gain."
Ms Primarolo chose not to address the point about her Ministerial colleague's trip to the US, but instead she listed the achievements of this Government for small businesses and queried why the Conservative Party supported 'a few workers who use their companies to avoid paying tax when millions of others pay their tax'.
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