IR35 Tax Battle Not Over Yet Says Professional Contractors Group

by Jason Gorringe, Tax-news.com, London

25 April 2001

The battle between the Professional Contractors Group (PCG) and the Inland Revenue is not over just yet, as the PCG has revealed that it is awaiting news from the Court of Appeal on whether or not it can appeal against the decision of the High Court which, after a lengthy court case last month, rejected the PCG's claims that the controversial IR35 tax regime is incompatible with European free trade laws and the Human Rights Act.

IR35 is aimed at ending the tax advantages enjoyed by individuals who, but for the fact that they operate through companies, would be deemed to be directly employed by their clients. The intention is to re-classify them as employees who would lose advantages such as tax-deductible expenses.

The government has repeatedly defended IR35, saying it is designed to weed out people avoiding paying tax and National Insurance contributions, but the tax rule, which affects around 100,000 consultants, mainly in the information technology arena, has been blamed for driving hundreds of IT specialists overseas, or even out of business.

According to an Accountancy Age report, the PCG is expecting the Court of Appeal to make its decision within the next four weeks. Meanwhile, the campaign group says it is due to meet representives from the Inland Revenue hopefully in 'weeks rather than months' to discuss issues such as the controversial tests which determine IR35 eligibility.

Recommended