Why David Davis is right to call for an immediate review of IR35: Greg Wright

Mr Davis described how Ms Adams’ won a legal case against HMRC in a dispute over whether she should be taxed as an employee or a self-employed contractor. The case related to IR35 rules, which are designed to clamp down on tax avoidance by so-called disguised employees, who charge for their services via limited companies. According to the Government, these off-payroll working rules make sure that a worker, sometimes known as a contractor, pays broadly the same Income Tax and National Insurance as an employee would.

However, Mr Davis told the Commons: “A fortnight ago, Kaye Adams, the TV presenter, won her case against HMRC on IR35 status. Despite the fact that she won her first tax tribunal on this, over nine years the HMRC took her to either tribunal or court four times, forcing her to spend £200,000 in legal fees. HMRC spent many times that using two King’s Counsels at the last hearing alone. This was over a net tax bill of £70,000. There is no conceivable economic case for this.”

He added: “When is the Government going to review IR35 and, ideally, abolish it?”

Treasury minister Nigel Huddleston said the Government had a duty to ensure that everyone pays the right tax under the law regardless of wealth or status. “We do note the decision of the tribunal. We’ll carefully analyse this outcome before considering next steps.” He said the rules are designed to ensure a “level playing field” between workers.

The case clearly took its toll on Ms Adams. In a statement released to ContractorCalculator, she said that, over the nine years of the investigation, the mental stress had been close to unbearable at times.

She added: “I accept that HMRC has a duty to ensure that everyone pays the correct tax, and I wholeheartedly support it in that endeavour. I have fully cooperated with this inquiry for nearly a decade. However, this is the third court which has concluded that I am a self-employed individual, and HMRC has not once proven otherwise."

Critics of IR35, including Dave Chaplin, CEO of tax advisory firm IR35 Shield, said that many firms adopted blanket policies and pushed workers on to the payroll, often insisting on using unregulated umbrella companies. He said: “The interposition of an umbrella company in the supply chain resulted in the hiring firm's new 13.8 per cent National Insurance Contributions tax bill being transferred to the worker, which under normal circumstances, for an employee, would be an unlawful deduction."

The Government can get on the front foot in 2024 – an election year – by ordering a review of this contentious policy.

Greg Wright is the deputy business editor of The Yorkshire Post