In this report, the Committee considers the issue of tax equity between the employed and self-employed. This complex topic raises many questions, one of which relates to the way in which the tax system classifies workers. Do changing work patterns indicate the need for a new approach to classification for tax purposes? Is the case law that currently governs the area sufficiently robust and clear, especially in the light of the new burden placed upon it by the so-called ‘IR35’ legislation on personal service companies? What is the relation between classification of workers for taxation and their classification in other areas of law, particularly employment law? These are some of the issues addressed in this paper.

The schedular system of income tax in the UK frequently comes under attack, not least in relation to the distinctions it draws between the tax treatment of the employed and the self-employed.