Stephen Timms, Financial Secretary to the Treasury, has been accused by the Times newspaper of benefiting from the IR35 tax change that he fought to implement. It revealed that he owns shares in IT research and consultancy company Ovum, which may benefit from the IR35 regime.
Industry sources say the IR35 will force many of Ovum's small business competitors to close or to move overseas, as the tax can take away up to a quarter of their income. This will then leave the path clear for larger operations, such as Ovum, to dominate the market.
Timms is transferring a 3.7% holding into a trust to avoid a conflict of interests. But the Treasury has revealed that Timms was to transfer the shares as long ago as March, but ten months later the shares are still held in his name.
The transfer of the shares had yet to go through because, although Timms had signed the paperwork, it had yet to be approved by the board, according to Ovum.
The Shadow Chancellor, the Rt Hon Francis Maude MP, said, "If these allegations are true they raise serious questions about Stephen Timm's involvement with this legislation. Can it be right that he should have been promoting a new tax that could directly benefit his own company?"
David Ramsden, director of the Professional Contractors Group (PCG), which represents over 5,000 contractors said, "We believe that IR35, which will damage if not destroy many small IT and engineering consultancies, has been lobbied for by big business, like Ovum. Stories like this confirm this, and our members who put their trust in Tony Blair at the last election, will wonder if there is any party in this country that can govern for the interests of the majority rather than the narrow, self serving interests of their 'cronies.'"
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