Mr. Flight: Specifically, I understand that while, the issue relating to partnership expenses has been addressed, the parallel problem that occurs when partners purchase capital assets has not been addressed, and they receive no relief in the IR35 calculation. Will the Paymaster General confirm that that is correct? If so, given what she has just said, do the Government intend to address that unfairness? If my drafting is as she says it is, I accept that, but the amendment's objective is perfectly clear and fair. I am glad to hear that she agrees with that objective.
Dawn Primarolo: The hon. Gentleman misunderstands the service company arrangements that were put in place last year. The purpose of the changes was to ensure that an individual who was an employee of the service company received all the rights of an employee. We wanted to prevent an individual
Column Number: 137from trying to get all the benefits of an employee and then, when they were clearly working in another company, receiving all those benefits too. We said, ''No, you can't have both. You must be one or the other.''
The clause goes further and includes other reliefs, such as personal incidental expenses and qualifying child care. I am happy to confirm that, for want of a better way of putting it, IR35 workers can claim personal incidental expenses in the same way as a direct employee if they are direct employees and working for the service company.
The Chartered Institute of Taxation has also suggested that we might want to consider giving relief for appropriate child care cost. It is certainly a suggestion that the Government are prepared to examine in their wider consideration of child care costs. On the partnership asset issue, our view is that it is a hypothetical problem that has been put to us without demonstrating that it actually exists. Until it is demonstrated that there is a problem that needs to be addressed, as opposed to a hypothetical problem, why should we take up space in Finance Bills to deal with it?
The rights of employees in service companies are the same and those employees have the same access as any others. All we want is for them to choose which they
Column Number: 138are, rather than claim that they are both. I hope that I have reassured the hon. Gentleman that the Government have absolutely no intention of preventing employees of service companies from getting access to all the rights that any employee would have.
Mr. Flight: I thank the Minister for her comments, and her implicit assurance that if the partnership asset issue arises, she would seek to address that fairly. On the basis of her responses, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 38 ordered to stand part of the Bill.
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