The government's decision to retain IR35, which will affect contractors and freelancers in the UK, is not surprising, according to one law firm.

Emma Harvey, head of recruitment at DWF, said any changes to the tax regime need to be made as easy as possible for both individuals and small businesses to comply with.

She welcomed the government's commitment to targeting compliance activity by restricting reviews to high-risk cases and setting up a dedicated IR35 forum.

"IR35 lacks clarity and no longer fits the commercial reality of contracting in the 21st century," she went on to say.

"However, its complete abolition would doubtless lead to a return to the past when many individuals worked as self employed contractors when they were not."

However, the Chartered Institute of Taxation said ahead of last week's Budget announcement that no action on IR35 is "simply not acceptable", saying the idea of merging the PAYE and NIC systems should be considered.