The IR35 Judicial Review hearing opened yesterday in the High Court in London before Mr Justice Burton on the application of the Professional Contractors Group Ltd vs. Commissioners of Inland Revenue.
Gerald Barling QC is representing the PCG, Richard Plender QC is representing the Inland Revenue.
The first day of the hearing was probably a win on points for the Professional Contractors Group. As often happens in a court room, much of the time is spent educating the judge in the legal and commercial background to the case. Judge Burton seemed largely ignorant of the circumstances around IR35, so at least he is not coming to the case with any baggage.
Gerald Barling spent most of yesterday presentening the PCG's case, and gained the judge's acceptance of a number of key propositions during the day. For instance, on the proposition that IR35 makes it impossible to arrange one's own affairs and proceed accordingly, Judge Burton asked: 'What you are saying then is that in IR35 one cannot arrange one's affairs with any certainty. One can arrange one's affairs and then anticipate year on year and contract upon contract a fight with the Revenue. That would indeed be uncertainty. That seems to conflict with what the Revenue are seeking to argue."
On the basis of yesterday's rate of progress, it seems unlikely that the hearing will finish this week. The Judge said he might well need a further week to assimilate and consider all the evidence, and if this is the case then a further hearing will have to be scheduled for a later date because the Inland Revenue's barrister is not available next week.
If a judgment were not available by April 5th, the end of the tax year, collection of tax from individuals and companies covered actually or potentially by IR35 could be compromised - under the legislation, personal service companies, the structures used by an estimated 90,000 self-employed consultants, are supposed to pay tax due for the previous year by April 19th. Their effective rate of tax and National Insurance will typically rise from 21 per cent to 35 per cent under IR35, according to the Revenue.
The basis for the judicial review is that the Act and legislation which enable IR35 are incompatible with European law and the Human Rights Act 1998 and IR35 is, therefore, unenforceable. The Inland Revenue (the respondents) contend that the legislation is fair, proportionate, and compatible with all the obligations under European law and was brought in to counter tax avoidance in the 'personal service' sector.
The Professional Contractors' Group, which represents 12,000 consultants and won the right to the review in the autumn, says that by taxing personal service company consultants differently from those of big multinational consultancy firms, the Revenue is discriminating against small businesses. The PCG also challenges the new rules on the grounds that they hamper the free movement of workers in Europe - by imposing punitive taxes - and constitute a confiscation of property under the UK's new human rights law.
If IR35 stands, warns the PCG, the quality of IT services in the UK will suffer as consultants move abroad. It is thought that about 90,000 consultants are affected by the legislation. Many are already said to have gone, but there are no firm figures.
.
Network Tweets
Network BlogsContent
provided by
|
Archive | Resources | Partners | Site Map | Links | Newsletter Archive | Contact | RSS Feeds | About | Syndication | Advertising & Marketing | Recruitment | Terms & Conditions | Privacy & Cookies
Copyright © 2012 - All Rights Reserved - Tax-News.com
IMPORTANT NOTICE: Tax-News.com has taken reasonable care in sourcing and presenting the information contained on this site, but accepts no responsibility for any financial or other loss or damage that may result from its use. In particular, users of the site are advised to take appropriate professional advice before committing themselves to involvement in offshore jurisdictions, offshore trusts or offshore investments.
Write a comment